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WTO dispute panel finds India’s programs violate trade agreement

WTO dispute panel finds India’s programs violate

A World Trade Organization (WTO) dispute panel agreed with the United States that India provides prohibited export subsidies to Indian exporters worth over $7 billion annually. According to the WTO dispute panel, India gives prohibited subsidies to producers of steel products, pharmaceuticals, chemicals, information technology products, textiles, and apparel.

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A release from the U.S. Trade Representative (USTR) explains the Indian programs found in violation of WTO rules are:

  • Merchandise exports from India scheme (MEIS)
  • Export oriented units scheme and related sector specific schemes (EOU)
  • Special economic zones (SEZ)
  • Export promotion capital goods scheme (EPCG)
  • Duty-free imports for exporters program (DFIS) 

The WTO panel gave India six months to withdraw these prohibited subsidies.   

Export subsidies provide an unfair competitive advantage to recipients, and WTO rules expressly prohibit them. There is a limited exception to this rule for specified developing countries that may continue to provide export subsidies temporarily until they reach a defined economic benchmark.  India was initially within this group, but it surpassed the benchmark in 2015.  India’s exemption has expired, but India has not withdrawn its export subsidies. The WTO panel report rejects India’s assertion that it is entitled to additional time to provide export subsidies even after hitting the defined economic benchmark.  The WTO panel report concludes that each program is an export subsidy inconsistent with India’s WTO obligations. 


For more information on this topic or to learn more about KPMG’s Trade & Customs Services, contact:

Doug Zuvich
Partner and Global Practice Leader
T: 312-665-1022
E: dzuvich@kpmg.com

John L. McLoughlin
Principal and East Coast Leader
T: 267-256-2614
E: jlmcloughlin@kpmg.com

Andy Siciliano
Partner and National Practice Leader
T: 631-425-6057
E: asiciliano@kpmg.com

Steve Brotherton
Principal and Global Export and Sanctions Leader
T: 415-963-7861
E: sbrotherton@kpmg.com

Luis (Lou) Abad
Principal, Washington National Tax
T: 212-954-3094
E: labad@kpmg.com

Irina Vaysfeld
Principal
T: 212-872-2973
E: ivaysfeld@kpmg.com

Amie Ahanchian
Managing Director
T: 202-533-3247
E: aahanchian@kpmg.com

Robert Waldrop
Principal
T: 212-954-8117
E: rwaldrop@kpmg.com

Gisele Belotto
Managing Director
T: 305-913-2779
E: gbelotto@kpmg.com

Christopher Young
Principal
T: 312-665-3229
E: christopheryoung@kpmg.com

Andy Doornaert
Managing Director
T: 313-230-3080
E: adoornaert@kpmg.com

George Zaharatos
Principal
T: 404-222-3292
E: gzaharatos@kpmg.com

Jessica Libby
Managing Director
T: 612-305-5533
E: jlibby@kpmg.com

 

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