15:45 GMT15 January 2021
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    The US has launched a massive trade war against India, challenging the country's trade policy in its entirety at the World Trade Organization. The US has argued that subsidies give Indian companies an unfair advantage over their American counterparts.

    New Delhi (Sputnik) — US Trade Representative (USTR) Robert Lighthizer announced on Wednesday night that the US has requested dispute settlement consultations with the Government of India at the World Trade Organization (WTO) challenging Indian export subsidy programs.

    "These apparent export subsidies provide financial benefits to Indian exporters that allow them to sell their goods more cheaply to the detriment of American workers and manufacturers," a press statement issued by the USTR reads.

    "These export subsidy programs harm American workers by creating an uneven playing field on which they must compete," the statement further reads.

    The challenge covers India's decades-old programs like the special economic zone, the Merchandise Exports from India Scheme; Export Oriented Units Scheme and sector-specific schemes, including the Electronics Hardware Technology Parks Scheme; Export Promotion Capital Goods Scheme; and the duty-free imports for exporters program.

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    The US has alleged that through these programs, India provides exemptions from certain duties, taxes, and fees; reduces import duty liability; and benefits numerous Indian exporters, including producers of steel products, pharmaceuticals, chemicals, information technology products, textiles, and apparel.  

    "According to Indian Government documents, thousands of Indian companies are receiving benefits totaling over $7 billion annually from these programs," the USTR has claimed.  

    The US has cited provisions in the WTO's Agreement on Subsidies and Countervailing Measures which allowed least developed countries and developing countries to provide export incentives to any sector that has a share of below 3.25% in global exports provided the per capita gross national income (GNI) of the concerned country is below $1000 per annum at the 1990 exchange rate. The provisions say that country has to stop all export incentives if per capita GNI of such a country crosses $1000 for three consecutive years.

    According to a notification by the Committee on Subsidies and Countervailing Measures, India's GNI has crossed the $1000 mark for 2013, 2014 and 2015. The USTR alleged that despite the expiry of India's exemption in 2015, India has continued or even increased coverage of schemes like Merchandise Exports from India Scheme.

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    Under WTO rules, India and the US are now required to try to resolve the matter through bilateral consultation, following which a dispute settlement mechanism under WTO would give its verdict on the matter.


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