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“The consequence of India graduating out of the “The government knew all along that the special
list of poorer countries eligible to give export exemption that allowed India to give export
subsidies is serious. It will be open to penal action subsidies was likely to go in 2017. In fact, the
from other countries, including imposition of Foreign Trade Policy also mentions this. It should
countervailing duties on its exports if it does not have prepared the exporters for this,” a trade
do away with its incentives soon,” an official told economist from a Delhi-based thinktank said.
BusinessLine.
Other schemes that could also get affected,
The development could deal a further blow to subject to interpretation of the WTO rules, are the
exports from the country, which posted weak interest subvention scheme under which banks
growth last year after two consecutive years of charge lower interest on loans given to exporters,
decline due to low demand. which is offset by the government, and the duty-
drawback scheme where exporters are refunded
“The first scheme that could come under the duty paid on inputs.
WTO scanner is the popular Merchandise Export
from India Scheme (MEIS), which provides a “The WTO rules also consider the revenue that is
direct subsidy to exporters based on the value of otherwise due to the government but is foregone
exports,” the official said. or not collected, such as tax credits, as subsidy.
Some members may also insist that India’s interest
Wide impact subvention scheme and duty-drawback scheme
qualify as subsidies,” said the trade economist.
Almost all exports, ranging from textiles to
agriculture products, stand to be affected as the The Commerce Ministry, which is supposed to
scheme covers more than 7,000 items and costs announce the mid-term review of the ForeignTrade
the exchequer around `23,500 crore a year. Policy this month, will be in a fix about whether to
make any addition to the MEIS scheme as it could
A team of officials from the Permanent Mission of draw immediate criticism from other countries. It
India at the WTO held discussions with Commerce would also find it difficult to replace the existing
and Industry Minister Suresh Prabhu, Commerce MEIS schemes with production subsidies, which
Secretary Rita Teaotia and officials from the Trade are allowed by the WTO.
Policy Division on how the situation could be
tackled. (Source: http://www.thehindubusinessline.com/economy/
as-incomes-rise-exporters-pay-the-price-of-development/
article9856381.ece dated 12th September-2017)
26. SUBSIDY ON EXPORT GOODS MAY BE SCRAPPED; MERCHANDISE
EXPORT FROM INDIA SCHEME UNDER SCANNER: REPORT
The move may hurt the country’s exports, which “The consequence of India graduating out of the
showed a frail growth last year after due to list of poorer countries eligible to give export
low demand. subsidies is serious. It will be open to penal action
from other countries, including the imposition of
A recent notification from the World Trade Centre countervailing duties on its exports if it does not
(WTO) said that the country can no longer propose do away with its incentives soon,” an official was
export subsidies, as its per capita gross national quoted as saying.
income (GNI) has crossed USD 1000 for the third
year in a row, as reported by Hindu Business Line. This development could hurt the country’s exports,
45 August-September-2017
