“The US said it saw no valid legal basis for India’s assertion of compliance and that inconsistencies found by the WTO in its original rules remain. A compliance panel at this time would not contribute to a prompt resolution of the dispute,” an official familiar with the details of the meeting told TheHinduBusinessLine.

The setback to India, however, is only temporary, as its second request for a panel cannot be blocked.

“It was expected that the US would block India’s request as, by asking for a panel, India is trying to bring to an end the controversy that has been created around its sanitary and phytosanitary rules. The country’s new guidelines on avian influenza (bird flu) are in strict adherence to the WTO’s decision on the matter and it would now want a formal decision on the matter,” a trade expert from a Delhi-based research body said.

New Delhi had lost a case at the WTO in 2015 filed by Washington against restrictions that prevented American industry from selling poultry products, including chicken legs, in the Indian market.

Last year, India made changes in its rules on bird flu to bring it in line with the DSB’s ruling. It made further changes in its rules after its discussions with the US, to take care of specific concerns including recognition of disease-free and low pest areas.

Under the revised rules, India gave recognition to the concept of disease-free areas and areas of low pest or disease prevalence.

This means supply of poultry can continue from a disease-free area of a country even if the disease is prevalent in another area of that country. Moreover, areas of low pest or disease are also not to be treated at part with high pest regions.

The US, however, continues to be dissatisfied with the changes made by India and want the rules to be further refined to give more comfort to its poultry industry to do business in India.

If India lifts import restrictions on poultry, it could open the doors for cheap chicken legs from America and significantly impact the local industry.

According to industry estimates, the US could potentially take away 40 per cent of the market of domestic breeders, who produce 3.5 million tonnes of chicken annually.