Special Economic Zones in India

Part of the series India Studies in Business and Economics pp 171-198


SEZs in the Multilateral Trading System

  • Arpita MukherjeeAffiliated withIndian Council for Research on International Economic Relations Email author 
  • , Parthapratim PalAffiliated withIndian Institute of Management
  • , Saubhik DebAffiliated withEconomist and Independent Consultant
  • , Subhobrota RayAffiliated withEconomist and Independent Consultant
  • , Tanu M. GoyalAffiliated withIndian Council for Research on International Economic Relations

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Export-linked subsidies given to the manufacturing units under the Indian SEZ policy can be actionable under the WTO subsidies and countervailing measures (SCM) agreement. Until recently, India was allowed to give certain prohibited subsidies under Annex VII of the SCM Agreement. However, since India may soon graduate from the list of the least Annex VII countries, there is an urgent need to review the subsidies. The WTO is yet to develop a discipline on subsidies in services; therefore, India can continue to subsidise services. Given this scenario, this chapter suggests subsidies and policies that can benefit SEZs without drawing retaliatory actions under the present WTO rules.