Export Incentives
WORKING PAPER NO. 72
EXPORT INCENTIVES IN INDIA WITHIN WTO FRAMEWORK
RAJEEV AHUJA
JULY, 2001
INDIAN COUNCIL FOR RESEARCH ON INTERNATIONAL ECONOMIC RELATIONS
Core-6A, 4th Floor, India Habitat Centre, Lodi Road, New Delhi-110 003
Contents
Foreword 1. Introduction............................................................................................................1 2. WTO Agreement on Subsidies and Countervailing Measures (SCM) ...................4 (A) Multilateral Discipline on Subsidies ....................................................................5 (B) Countervailing Measures ..................................................................................12 Suggestions for the Improvement of the Agreement ..............................................13 3. Analytics of Export Subsidy and Countervailing Duty ..........................................16 4. GOI Export Promotion Measures ........................................................................20 Incentives through Directorate General of Foreign Trade (DGFT) .........................21 Incentives through Ministry of Finance (MOF)........................................................31 5. Conclusion...........................................................................................................41 6. References: .........................................................................................................42
2
Foreword
Under the WTO Agreement on Subsidies and Countervailing Measures (SCM Agreement), India like other low-income countries has been exempted from the prohibition of export subsidies. But this exemption does not prevent other Member countries from imposing countervailing duties if our subsidised exports cause injury to their domestic industry. However, not all export incentives are subsides as per the SCM Agreement. For example, refund/remission of duties/taxes is not a subsidy. Given the WTO reality and the overall resource
EXPORT INCENTIVES IN INDIA WITHIN WTO FRAMEWORK
RAJEEV AHUJA
JULY, 2001
INDIAN COUNCIL FOR RESEARCH ON INTERNATIONAL ECONOMIC RELATIONS
Core-6A, 4th Floor, India Habitat Centre, Lodi Road, New Delhi-110 003
Contents
Foreword 1. Introduction............................................................................................................1 2. WTO Agreement on Subsidies and Countervailing Measures (SCM) ...................4 (A) Multilateral Discipline on Subsidies ....................................................................5 (B) Countervailing Measures ..................................................................................12 Suggestions for the Improvement of the Agreement ..............................................13 3. Analytics of Export Subsidy and Countervailing Duty ..........................................16 4. GOI Export Promotion Measures ........................................................................20 Incentives through Directorate General of Foreign Trade (DGFT) .........................21 Incentives through Ministry of Finance (MOF)........................................................31 5. Conclusion...........................................................................................................41 6. References: .........................................................................................................42
2
Foreword
Under the WTO Agreement on Subsidies and Countervailing Measures (SCM Agreement), India like other low-income countries has been exempted from the prohibition of export subsidies. But this exemption does not prevent other Member countries from imposing countervailing duties if our subsidised exports cause injury to their domestic industry. However, not all export incentives are subsides as per the SCM Agreement. For example, refund/remission of duties/taxes is not a subsidy. Given the WTO reality and the overall resource
References: Table 1: CVD Measures in Force (as on Dec. 31, 2000) Against Indian Exports by WTO Members 43