India will have 12-18 months to implement this ruling, after which the US can begin exports of poultry products to India.
"The Appellate Body agreed with the Panel's finding that India's AI (avian influenza) measures are inconsistent... because they are not based on a risk assessment," WTO said.
A WTO panel's last year ruled that India's ban on US poultry product imports was inconsistent with global norms.
The Appellate Body also upheld the panel's findings that India's AI measures are neither "based on", nor "conform to", the relevant international standard.
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It also endorsed the panel's finding that India's AI measures violated global norms on the grounds that the prohibition was limited to just one country and not to all imports from any country with AI risk.
India filed an appeal in January 2015 with the Dispute Settlement Board of the World Trade Organization (WTO).
India is a big market for the US, which is one of the world's largest exporters of chicken meat.
India's broiler meat consumption has been consistently increasing and is estimated to have touched 3.72 million tonnes in 2014, from 3.45 million tonnes in 2013.
The US contended that India's Avian Influenza measures amounted to an import prohibition that was not based on the relevant global standard or on a scientific risk assessment.
The WTO norms allow for the affected parties to dispute the panel's ruling "on points of law, such as legal interpretation". However, the dispute settlement process can not re-open factual findings made by the panel.