The legal team in the Ministry and Commerce and Industry is busy preparing an appeal against the judgment given by the World Trade Organisation’s dispute panel which ruled that several of India’s export incentive schemes go against multilateral trade rules. The team has time till about the end of this month to appeal before the WTO’s Appellate Body.
But what is interesting is that the apex decision-making body may not be in a position to decide on the dispute anytime soon. Yet, when a decision is challenged by an appeal by the member-country concerned it cannot take effect.
Since the US has scuttled the process of appointment of new judges to the Appellate Body, it is likely to become dysfunctional from December 11, when the number of judges on the panel will fall below the minimum of three. So, India may have the leeway of continuing with the incentive schemes.
This state of affairs may continue for a while, as the US does not seem inclined to let go of its demand that reforms be brought about in the Appellate Body before the new judges are appointed. Attempts by other members to work out an arrangement between themselves to settle disputes are also in a nascent stage.
It is well understood by policymakers in India that certain schemes, such as the popular Merchandise Export Incentive Scheme, undoubtedly qualify as direct export sops which India should not be extending to its exporters, as the country, in 2015, crossed the prescribed threshold of $1,000 per capita Gross National Income for three consecutive years. It needs to stay on track with its 2020 timeline of replacing the scheme with a new one, compatible with WTO norms.
But for other targeted schemes such as the sops given to Special Economic Zones (SEZs) and the Export Promotion Capital Goods Scheme, where New Delhi believes that it is well within its rights to continue the programmes, it should stay put.
Senior Deputy Editor