The World Trade Organisation's (WTO) dispute settlement body has agreed to set up a panel to examine America's allegations against certain alleged export subsidy measures in India.
Last month, the US dragged India to the WTO's dispute settlement mechanism over export subsidies, saying that these incentives were harming the American companies.
"At its meeting on 28 May, the WTO's Dispute Settlement Body agreed to a request from the United States for the establishment of a dispute panel to examine certain alleged export subsidy measures in India," the WTO said in a statement.
The US has stated that all WTO members, including India, are required to provide subsidies consistent with provisions of the WTO's Agreement on Subsidies and Countervailing Measures, including refraining from providing subsidies contingent upon export performance.
The US has alleged that India appears to be providing such subsidies through various export promotion programmes, special economic zones and duty-free imports for the exporters' programme.
During consultation process, the US has alleged that India was continuing to grant these export-contingent subsidies and even expanded the scope and scale of the subsidies.
India has said that it was disappointed that the US chose to move forward with a request for a panel, as it believed bilateral consultations held on April 11 were constructive.
During the consultations, India provided a detailed understanding of the schemes implemented under its Foreign Trade Policy by answering all the questions raised by the US.
India has stated the schemes identified by the US do not violate India's WTO obligations and are in conformity with all the elements of the agreement. India's exports to the US stood at $42.21 billion in 2016-17, while imports aggregated at USD 22.30 billion during the same fiscal.