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India to explore grey area in WTO rules

The Centre is exploring certain “grey areas’’ in World Trade Organisation (WTO) rules to see if it can continue with its export subsidy schemes for some more time despite the fact that India will cross the low-income threshold this year.

According to the WTO rules, when a member’s per capita gross national income (GNI) crosses the $1,000 threshold for the third consecutive year, it is no longer eligible to give export subsidies.

As per the government official it is unclear that’s whether India will be entitled to an eight-year phase out period that is allowed under certain conditions. If there exists such a possibility, they may very well demand it.

In the meantime as per the figures released by the WTO’s Committee on Subsidies and Countervailing Measures, India’s GNI crossed the $1,000 mark for 2013 and 2014 this means that not only export subsidies for the textile sector which is anyway going to graduate out in 2018 as it breached the sectoral criteria of 3.25 percent of global exports in 2010 but even sops for other sectors would have to go.

With the Foreign Trade Policy (FTP) 2015-20 up for a mid-term review later this month, the Directorate General of Foreign Trade (DGFT) has asked the Trade Policy Division of the Commerce Ministry to examine the WTO rules minutely to see if India can make a case for an eight-year phase out period for its subsidy. According to figures released by the WTO’s Committee on Subsidies and Countervailing Measures. According to figures released by the WTO’s Committee on Subsidies and Countervailing Measures.

Popular schemes, like the Merchandise Export Incentive Scheme, Advance Authorisation Scheme and the Export Promotion Capital Goods scheme, may need to be discontinued once India crosses the GNI threshold.Exporters were promised certain schemes for five years when they very well knew that India’s status was about to change at the WTO. Popular schemes, like the Merchandise Export Incentive Scheme, Advance Authorisation Scheme and the Export Promotion Capital Goods scheme, may need to be discontinued once India crosses the GNI threshold.

The WTO rules say that when a member’s per capita gross national income (GNI) crosses the $1,000 threshold for the third consecutive year, it is no longer eligible to give export subsidies.

 
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