“The US authorities, in a recent submission to the WTO committee on subsidies and countervailing measures SC., stated that it has reason to believe that India has met the definition of “export competitiveness”, as defined in the SCM Agreement for certain products. The agreement exempts developing country members (with per capita income below US$1,000) from prohibition on export subsidies, as long as exports of individual products are lower than 3.25% of world trade for two consecutive years .
“The US requests that the Secretariat (WTO) undertake a computation of the export competitiveness of textile and apparel exports from India, in accordance with Article 27.6 of the SCM Agreement,” the submission stated .
“Since most of the support given by the Indian authorities to textile exporters was on a short-term basis, there was a low risk of the US move leading to action against India*s exports, according to an Indian government official. “Things are at an initial stage. We are certainly going to keep an eye on how things develop,” he said .
“At present, the subsidies being given to Indian textile exporters (which includes handicrafts and carpets) include discount on interest on loans and incentives for exporting to particular markets in the form of duty-free import scrips tradable in the market. These benefits are part of the Indian authorities’ efforts to help the domestic industry amid the global economic downturn .
“Other industry observers, such as Manab Majumdar, head of the WTO committee at the Federation of Indian Chambers of Commerce and Industry (FICCI), mentioned that the country could give subsidies under other flexibilities allowed by the WTO. “India is also allowed to give support to exporters under the special & differential treatment S&DT). So, I don’t foresee any problem,” he said .