India will engage with the US to explain the legitimacy of its export subsidy schemes following America's decision to approach the World Trade Organisation (WTO) on the issue, Commerce Secretary Rita Teotia said on Thursday. Teotia told journalists that India has not violated any WTO norms and it would soon respond to the USA's application.
A WTO member country gets 60 days to respond. The US on Wednesday filed a complaint at the WTO against India's export subsidy programmes, claiming these initiatives harm US companies by creating an uneven playing field. The US sought consultations with India on the issue under the aegis of the WTO's dispute settlement mechanism.
"The US has asked for a consultation process, we will engage fully in the process and we would make sure that we make our position known to the US. We expect that they would also engage with a positive spirit with an effort to resolve a dispute with a friendly country," Teaotia said.
Developed countries have argued at different fora that since India has crossed the USD 1,000 threshold of per capita gross national income (GNI) for three consecutive years, so it is no longer eligible to extend subsidies for exports. The commerce secretary explained that a clause in WTO's agreement on subsidies and countervailing measures provides a period of eight years for graduating countries (crossing the USD 1,000 mark) to phase out export subsidies.
"Our presumption is that India also has a similar period of eight years to graduate out of the subsidy regime and this is what we would be placing before the US,'' she disclosed.
"We are hopeful that they would recognise this time-frame and during this time frame, we would commit ourselves and meet our obligations. There is a confusion over the year from which the eight-year period will be calculated. India wants that the reference year should be 2015," she observed.
According to the US, Indian subsidy programmes harm American workers by creating an uneven playing field. These programs are: merchandise exports from India scheme, export oriented units scheme and sector specific schemes, including electronics hardware technology parks scheme.