WTO WAR Between INDIA & US - Will India Lose? Impacts on INDIA ECONOMY.

Background:

WTO - World Trade Organization.
  • India provide Subsidiary to its many exporters so that their export business get encourage.
  • So that, They can sell their products in International Market at Lower Price as compare to other countries Same product.
  • India Foreign Reserve also get increase as these exporters earn in USD.

Now what Happen 

 USA filed a case on INDIA in WTO that - How India is providing subsidies to its many private exporters.

 Who Provide This Subsidiary

 "EXIM Bank" Provides this Subsidiary. Subsidiary can be provided in many ways
  • In terms of incentives.
  • Cheaper loans to private exporters.
  • Providing Money directly to their bank account. 
  • International Advertisement done by Govt. 
As per our Commerce Secretary  'Rita Teaotia' said that - There was a 'real' possibility India can lose this case against USA.

 And in Future - India may Need to Stop these subsidiary. (If INDIA Lose the case in WTO)

Why USA Files a case 

 When In market Indian Product came in competition of Americans Product in international Market. USA Think - Indian Products have support at back in terms of subsidiary and Americans Product can bear loose. 

 It does not mean - USA is poor , because any country can pull INDIA in WTO, because this is against WTO Agreements.

 WTO categorized  subsidiary into three parts i.e. How Much subsidiary can any country provide to its exporters:

RED  - Prohibited.
YELLOW - Permitted but actionable.
GREEN - Permitted and non-actionable.
INDIA is in RED Zone.

Why USA can't provide excessive subsidiary to its exporters as India is doing - It's because due to WTO AGREEMENT
ASCM (Agreement on Subsidies and countervailing measures ) 

In 1990s WTO noticed there are many countries which are not growing - so WTO introduced ASCM to grow their countries.

Under this Agreement:

Country can provide excessive subsidiary if country as GNI(Gross National Income) per capita is below USD 1000 to promote it's Private exporters.
but as per 2017 CEIC Data, India's GNI per capita was USD 1978.

https://www.ceicdata.com/en/indicator/india/gdp-per-capita

Now, INDIA GNI per capita was not below USD 1000 - Hence There are many chances INDIA can lose a case against USA in WTO.

By using this Rule - Our Private companies(exporters) earning USD 7 Billion annually Extra - which is a very large number.  (This is rough estimate as per USA)

 NOW what will be INDIA STRATEGY, Are we PREPARED to FACE THIS?

 NO, INDIA is not prepared. 

Our Commerce Minister ' Suresh Prabhu' on record stated that :
  • We are not the only country which is availing this benefit.
  • He said, India should be given a chance to phase out export subsidies over a period of eight years. ( i.e. we need 8 years calculated from 2017 - we will stop this in phases )
What INDIA CAN DO NOW

Represents in a good way in WTO. (By using Diplomatic Pressure)
Bilateral-Talk with USA and request USA and request USA to put less pressure on INDIA.

 All this is because, we never expected that any country will pull India in WTO against this.
Now, Time to make our exporters Self-Reliable as they are more dependent on Govt. India can provide Good Infrastructure.India already working n this.
India is making DRY PORT to help exporters.

 But If we unable to get 8 years or we unable to make our exporters self-reliable - Then it impact on India economy.


For More Info you can go through below Links:-

 https://www.hindustantimes.com/india-news/india-should-not-be-singled-out-on-export-subsidies-says-suresh-prabhu/story-YF28nFogBMMttRmbrqmLiO.html

 https://www.thehindu.com/business/Economy/india-could-lose-trade-dispute-with-us-at-wto-commerce-secretary/article24462255.ece

Do Comment/Correct in case of any wrong Data, wrong info and share your views on - 'Foreigners (Protected Areas) Order 1958'. Add more info if anyone have in comments, I will verify and update the details in Post- Keep Learning !


 Above Information is as per my understanding and  as per data available in news till the date when I am posting this.


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