The U.S. has requested dispute settlement consultations at the World Trade Organization to challenge India’s export subsidy programs, the Office of the U.S. Trade Representative reports.
The programs being challenged are the merchandise exports from India scheme; the export-oriented units scheme and sector-specific schemes, including the electronics hardware technology parks scheme; special economic zones; the export promotion capital goods scheme; and a duty-free imports for exporters program. USTR states that these programs provide more than $7 billion annually in total benefits, including exemptions from certain duties, taxes, and fees and reduced import duty liability, to thousands of Indian exporters, including producers of steel products, pharmaceuticals, chemicals, information technology products, textiles, and apparel.
WTO rules expressly prohibit export subsidies, USTR states, but allow specified developing countries to continue to provide export subsidies until they reach a defined economic benchmark. USTR notes that India surpassed this benchmark in 2015 but has not yet withdrawn its export subsidies and in fact has increased their size and scope.
For example, the merchandise exports from India scheme introduced in 2015 has rapidly expanded to include more than 8,000 eligible products, nearly double its initial coverage. Exports from SEZs increased by more than 6,000 percent from 2000 to 2017 and accounted for 30 percent of India’s export volume in 2016. In addition, exports from the export-oriented units scheme and sector-specific schemes increased by more than 160 percent from 2000 to 2016.