For All Defence Aspirants india -US dispute on export subsidies

For All Defence Aspirants india -US dispute on export subsidies

India -US Dispute On Export Subsidies


The World Trade Organization’s WTO Dispute Settlement Body Has Set Up To Examine The US Complaint Against Certain Export-Subsidy Measures By India As Both The Sides Have Failed To Resolve The Issue At Construction Level.

Key Points

In April,2018 The US Has Dragged India  To The  WTO’s Dispute Settlement Mechanism Over Export Subsidies, Saying That These Incentives Were Harming The American Companies.

The US Has Started That All WTO Members Including India, Are Required  To Provide Subsidies Consistent With Provisions Of The WTO’s Agreement On Subsides And Countervailing Measures, Including And Countervailing Measures, Including Refraining From Providing Subsidies Contingent Upon Performances.

The US Has Alleged That India Appears To Be Providing Export Subsidies Though Various Export Promotion Programmes Such As Merchandise Exports From India Scheme (MEIS),Export Oriented Units Scheme ,Export Promotion  Capital Goods ,Scheme And Duty -Free Imports For The Exporters’ Programme.

India Has Started That The Schemes Identified By The US Such As Various Promotion Programmes, Do Not Violate India’s WTO Obligations And Are In Conformity With All The Elements Of The Agreement On Subsidies And Countervailing Measures.

Genesis Of The Dispute

As Per The WTO’s Agreement On Subsidies And Countervailing Measures (ASCM) Any Developing Country, Which Breaches 41,000 Gross National Income (GNI) Per Capita For Three Consecutive Years, Will Have To Phase Out Its Export Subsidies.

India’s GNI Per Capita Crossed $1,000 Level For Three Consecutive Years, Starting 2013 To 2015 And , Thus, India Is No More Allowed The Flexibility Export Subsidies To Its Domestic Manufacturers.


For India. It Is The Right Time To Start Phasing Out Specific Export Subsidies Or Recalibrate Existing Subsidies To The WTO -Compatible  Ones. It Can Restructure Subsidies To Include The Ones With Legitimate & Development Goals, Supporting Regional Growth, R&D ,Production Diversification And Implementation Of Environmentally Sound Methods Of Production As Per The Proposals Under The Doha Implementation Decision.

The Mid Term Review Of Foreign Trade Policy (FTP), Carried Out Last Year Had Also Highlighted That Indian Industry Needs To Adjust To Eventual Phasing Out Of Export Subsidy Schemes, Going Forward. It Highlighted A Move Towards More Fundamental Systemic Measures Rather Than Incentives And Subsidies Alone As A Future Strategy To Boost Exports.

A Production -Based Subsidy Can Be Used To Replace Export Subsidies, As The These Are Allowed Under The WTO. Thus Cluster-Based Approach Can Be Adopted Where Export-Centric Clusters Could Be Selected And Subsidies Given To Units Based On What They Produce Rather Than What They Export.

Meanwhile, India Can Also Request The WTO For Extension Or Differential Treatment With Regards To Specific Subsidies.

Also, It Is Quite Appropriate That An Informal Committee Has Been Set Up Under The Director General Of Foreign Trade(DGFT) To Identify The Non -Compatible Provisions And To Look For Alternatives.

Generalized System Of Preferences(GSP)

The US Government Has Withdrawn GSP (Generalized System Of Preferences)Benefits To India Worth $ 70 Million On As Many As 50 Items Mostly From Handloom And Agriculture Sector.


Trade Relationships Between India And The US Have Gone Downhill In The Last Few Years.

The US Had Imposed Enhanced Tariffs On Steel And Aluminium Imports From India And Had Challenged Its Export Subsidy Regime At The World Trade Organization(WTO).

India Had Also Dragged The US To The WTO On Higher Steel And Aluminium Tariffs And Has Threatened To Impose Retaliatory Tariffs Worth $ 240 Million On US Imports.

Impact Of GSP Withdrawal

Impact On India

The Major Beneficiaries Of GSP In India Were Micro, Small And Medium Enterprises (MSME). MSME Sector Is Employment Intensive And Therefore Withdrawal Of GSP Will Have Adverse Impact On Employment In MSME Sector.

Impact On The US

FICCI Has Aid That The Termination Of The GSP Would Be Contrary To The Objective Of The Trade From Act Of 1974 Of Furthering The Economic Development Of Developing Countries.

It Would Cause Significant Distress To The Export-Oriented Sectors Leading To Increased Cost For US Industries That Use Products Under The GSP.



Er. HartaJ is one of the main Instructors and a part of the team At NCA. He himself has cleared the SSB process thrice, but as per his grandfather's Late Lt. Col H.S.Dhaliwal Wish he is continuing teaching and making officers. Been associated with New Careers Academy for the last 8 years, he also has been succefull in making Second and Third Generation Of officers. Once Taught by his Grandfather and Father Capt. Dhaliwal. He is know all across with students for the way he teaches and he is more of a role model for them .