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India on Thursday lost a case filed by the US at the World Trade Organisation (WTO) against domestic export incentives as the dispute settlement panel concluded that these schemes are inconsistent with the international trade norms.
Reacting to the ruling, Trade Representative Robert Lighthizer on Thursday said under the leadership of President Donald Trump, the US is “using every available tool, including the WTO enforcement actions, to ensure American workers are able to compete on a level playing field.”
“This is a resounding victory for the United States,” he said in a statement.
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President Trump has previously said that India’s “very high” tariffs on US goods are “unacceptable” and must be withdrawn.
Trump, championing his ‘America First’ policy has been a vocal critic of India for levying “tremendously high” duties on US products, has described the country as a “tariff king”.
The WTO ruling has stated that India should not provide subsidies based on export performance.
The dispute panel ruled that India’s export incentive schemes such as Merchandise Export from India Scheme (MEIS), Export Oriented Units (EOUs), Electronics Hardware Technology Parks (EHTP)Scheme; SEZ (special economic zone); and Export Promotion Capital Goods (EPCG) Scheme were inconsistent with global trade norms.
The panel has stated that India will not get an eight-year period like other developing countries for phasing out these schemes.
With this ruling, India has to re-work these schemes and make them compatible with global trade rules, being framed by 164-member Geneva-based WTO.
According to trade experts, the ruling would impact India’s exports and the government will have to immediately work on alternatives.