India’s PLI Schemes and WTO Hurdles

As most of the readers of this column may be aware, just a couple of days before India went into a prolonged lockdown spanning over 10 weeks, the Government of India had announced the grant of ‘Production Linked Incentives’ (PLIs) for manufacturers of specified goods in the electronics goods and components industry as well as for producers of specified drugs, drug intermediates and medical devices under separate schemes. Readers would also be aware that back in early November 2019, the World Trade Organization (more commonly known as the WTO), which is the overarching governing body for regulation of discipline in trade and tariff among its member countries, had red flagged India’s Merchandise Exports from India Scheme (MEIS), which is very popular amongst goods exporters in the country.

On a specific complaint lodged by the United States of America (USA) against India, the WTO had categorically ruled that the incentives under MEIS are directly in the nature of prohibited subsidies defined in the WTO Agreement on Subsidies and Countervailing Measures (SCM Agreement).

The WTO had granted India a time frame of 120 days from the date of adoption of its report (30 th November, 2020) to pull out the MEIS from…