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A recent notification from the World Trade Centre (WTO) said that the country can no longer propose export subsidies, as its per capita gross national income (GNI) has crossed USD 1000 for the third year in a row, as reported by Hindu Business Line.
“The consequence of India graduating out of the list of poorer countries eligible to give export subsidies is serious. It will be open to penal action from other countries, including the imposition of countervailing duties on its exports if it does not do away with its incentives soon,” an official was quoted as saying.
This development could hurt the country’s exports, which showed a frail growth last year after due to low demand.
“The first scheme that could come under the WTO scanner is the popular Merchandise Export from India Scheme (MEIS), which provides a direct subsidy to exporters based on the value of exports,” the official added.
How will this impact the country?
Most of the exports in India may be affected as the scheme covers more than 7,000 items and will cost the national treasury around Rs 23,500 crore a year, according to the report.
A meeting to discuss how the situation could be tackled was held. A team of officials from the Permanent Mission of India at the WTO held discussions with Commerce and Industry Minister Suresh Prabhu, Commerce Secretary Rita Teaotia and officials from the Trade Policy Division.
The Ministry of Commerce will announce the mid-term review of the Foreign Trade policy this month, to discuss the MEIS scheme.
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