Kolkata: Commerce Secretary Rita Teaotia on Thursday said there was a "real" possibility that India could lose the trade dispute that the US had filed in the WTO on export subsidies.
This, she said, was because income levels in India had crossed the threshold for exports to be subsidised.
"There is a real possibility that India will lose the trade dispute with the US at WTO over subsidising exports," she said at an ICC interaction here.
However, India has been responding "very strongly" to the US allegations, Teaotia said.
She said while direct subsidy to exports cannot be given, the government can legitimately support regulatory compliances required in other countries.
"Benefits to services exports will remain untouched, and GST refunds to exporters will continue as well," she said.
Support for input subsidy is also legitimate, the commerce secretary said. "However, incentive only for exports is not eligible. There must be a cost incurred and then compensation."
The government has already set up an expert group to look at WTO-compliant support to exports, and a draft set of schemes will be announced for discussion, she said.
Teaotia said that the existing export subsidy schemes were continuing, as the dispute was yet to be resolved.
The US in March this year dragged India to the WTO's dispute settlement mechanism over export subsidies, saying that these incentives were harming American companies.
Washington challenged India's export subsidy programmes such as Merchandise Exports from India Scheme in the WTO, asserting that these initiatives harm its companies by creating an uneven playing field.
The US said that thousands of Indian companies are receiving benefits totalling over USD 7 billion annually under various export promotion programmes.
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