The Indian government is currently contemplating to approach the World Trade Organisation's (WTO) dispute settlement body against the US move to raise import duty on aluminium and steel. Sources said that detailed discussions have been held in the commerce department. A senior government official said India also needs to be careful, given its massive interest in terms of presence of software and other professionals in the US as well as the large software exports.
Former officials dealing with WTO were also consulted on the issue. While a section believes that there is a case for a strong response, another view in the government is to wait for other WTO members to move the dispute settlement body so that India can then join in. Trade tensions have increased lately, with US President Donald Trump targeting India along with China and other countries. The US, last week sought consultations with India through the WTO dispute settlement body over half-a-dozen export promotion schemes. American authorities said these schemes were offering subsidies that impacted its business and workers.
Officials said the US action on steel and aluminium had set a dangerous precedent. They added that the government is currently taking a legal view and a decision on future course of action will be taken soon. In its request to hold consultations with India, the US argued that the incentives violate WTO agreements as India is no longer below the economic benchmark of $1000 per capita gross national income (GNI). US trade representative Robert Lighthizer said, “These export subsidy programmes harm American workers by creating an uneven playing field on which they must compete. USTR will continue to hold our trading partners accountable by vigorously enforcing US rights under our trade agreements and by promoting fair and reciprocal trade through all available tools, including the WTO.”
While Indian authorities said they will respond to the US request for consultation within the specified 60 days, they argued that like other countries in the past, India should be allowed a transition period of eight years. Commerce Secretary Rita Teaotia said, “Our presumption is that India also has a similar period of eight years to graduate out of the subsidy regime and this is what we will be placing before the US. We are hopeful that they will recognise this time frame and during this time frame, we will commit ourselves and meet our obligations.”
She added that India was not offering subsidies but many of the “incentives” were meant to neutralise the impact of taxes.
