India will appeal against the ruling of WTO's dispute settlement panel, which held that domestic export incentive schemes are inconsistent with global trade norms, an official said. The ruling has stated that India should not provide subsidies based on export performance. "India will be appealing the decision of the panel regarding the four schemes to the Appellate Body of the WTO," the official said.
The dispute panel on Thursday ruled that India's export incentive schemes such as Merchandise Export from India Scheme (MEIS), Export Oriented Units (EOUs), Electronics Hardware Technology Parks (EHTP)Scheme; SEZ (special economic zone); and Export Promotion Capital Goods (EPCG) Scheme were inconsistent with global trade norms.
The panel has stated that India will not get an eight-year period like other developing countries for phasing out these schemes. However, it has stated that duty free import for exports (DFIE) scheme does not violate WTO law.
The panel also held that the scrips provided through the MEIS are contingent on export performance, and therefore not allowed under the WTO norms. The panel has ruled that barring DFIE, all schemes provide subsidies linked to export performance and it is inconsistent with global trade norms.
With this ruling, India has to re-work these schemes and make them compatible with global trade rules, being framed by 164-member Geneva-based World Trade Organisation (WTO). According to trade experts, the ruling would impact India's exports and the government will have to immediately work on alternatives.
"We need to immediately work on new schemes, which are WTO compatible," Rafeeq Ahmed, the Chairman of Farida Group, said.