India’s WTO Strategy: A Success or Failure

India was one of the 23 original signatories to the General Agreement on Tariffs and Trade (GATT) concluded in 1947. When GATT’s successor, the World Trade Organisation (WTO), was formed in 1995, India became a founding member, and in the Doha WTO conference that took place in 2001, India emerged as the most outspoken advocates for the developing bloc. 

The meeting was declared a success, as the delegates of 142 countries agreed to a new round of trade talks, including topics such as environment, competition, and investment. WTO and its impact on the Indian economy has been huge. As India is integrating with the world economy and increasing its trade with countries around the world, there is a growing need for India to align itself with the World Trade Organisation (WTO). 

India’s Initiatives In WTO

India is one of the primary players responsible for power shifts in the WTO in recent years. It played a significant role in building developing country coalitions, such as the G20 and the G33. 

India has also been leading efforts to reform WTO subsidy rules to enable developing countries to engage in public food stockholding for food security purposes. It also calls for making the multilateral trading system more fair and inclusive.

With other emerging powers such as Brazil and China, India led the developing countries in securing some significant special and differential treatment (SDT) provisions. 

While India continues to advocate for developing and least-developed countries, it has softened its stance on a number of issues. India, for example, backed the first-ever multilateral trade facilitation agreement at the Bali Ministerial Conference in 2013.

India has been asking for a more equitable and inclusive multilateral trading system. In this context, India and South Africa filed a proposal to the World Trade Organisation (WTO) that called for development-oriented changes. The proposal also emphasised the growing trade tensions and the need to modernise the WTO’s dispute resolution structure. India, on the other hand, is opposed to modifying the WTO’s consensus-driven nature, which could be detrimental to the country’s interests.

Impact of WTOs Rule on India

“Subsidies” are defined by the World Trade Organisation (WTO) as “Grants, loans, equity infusions, loan guarantees, fiscal incentives, the provision of products or services, and the purchase of goods are the only options available. They do not include any trade-distorting indirect structural subsidy in the form of “revenues forgone.” “—lower (than cost recovery) utility tariffs, low land prices, a stifled labour market, artificially low capital, and so on—all of which are universal in nature and give China an advantage over India. The China Development Bank granted $30 billion in low-cost loans to the top five domestic solar panel manufacturers in 2010, despite the fact that countries like India cannot afford to subsidise their own producers. As a result, they want to defend their domestic sector through legislative hurdles such as tariffs and domestic content requirements.

There is also an agreement proposing an overall reduction of tariffs on manufactured products and the phasing out of the quantitative restrictions over a period of time which can lead to going out of business of small non competitive firms and so this way WTO and its impact on Indian economy can be negative.

Concerns are being raised in the WTO that direct tax concessions or tax holidays are being provided by many countries to support their exports/international trade. Disputes related to taxation have become more frequent involving conflicts between WTO agreements and respective country tax laws.

WTO also forbids the host country to discriminate against investments from abroad vis-a-vis domestic investment i.e. agreement requires investment to be freely allowed by nations but India has been using this to block China’s Investment in India.

Safeguarding duties are duties that a country has against imports to protect domestic manufacturers, but WTO does not allow them, and when a country restricts imports in order to safeguard its domestic producers, in principle it must give something in return, and this law also hurts developing countries as they are unable to protect domestic players against their biggest trade partners.

The Sanitary and Phyto-sanitary Measures Agreement (SPM) deals with restricting exports from any country that does not meet international standards for germs/bacteria and other cleanliness-related standards, which can hurt industries ranging from pharma to manufacturing to agriculture, as regions and countries such as the EU and the United States have extremely high standards.

TRIPs, which seek to safeguard and grant legal recognition to the author or creator of intangible work, and protect against illegal use of his creation, the negative impact of WTO, due to this will be on India’s pharma, biotechnology, and technology sectors, as it will restrict technological transfer.

If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be “dumping” the product. To protect these countries often apply anti dumping duties, and these protect developing countries as other countries cannot dump their low quality goods here, as China was dumping steel and solar panels in India, so the Indian government levied anti dumping duties to protect domestic producers.

Agreement on Agriculture (AOA) deals with giving market access, reducing export subsidies and government subsidies on agricultural products, and will hurt the entire farming sector.

India Moves Against WTOs Principles

The Indian government’s proposed plans to level the playing field for domestic thermal and solar power generation equipment producers in the face of unfair Chinese competition have been questioned due to their compliance with WTO regulations. Local content restrictions imposed on solar generators for qualifying under the national solar mission, in particular, appear to be in violation of these principles.

India has also asked for a clear dispute resolution mechanism in the global agreement to end harmful fisheries subsidies, and members are currently negotiating disciplines to eliminate subsidies for illegal, unreported, and unregulated (IUU) fishing, as well as to prohibit certain types of fisheries subsidies that contribute to overcapacity and overfishing, as leaving this issue unattended is causing the negative impact of WTO, on the natural ecosystem.

India appealed against a ruling of the World Trade Organisation’s (WTO), which ruled that the country’s domestic support measures for sugar and sugarcane are inconsistent with global trade norms, and is still providing sugarcane farmers government support, this issue especially led many people to think about the negative impact of WTO.

The WTO has also to set up a dispute panel against India on the request of Japan and Taiwan, over the import duties imposed on certain electronic goods, parts of telephone sets, telephones for cellular networks;  conversion and transmission or regeneration of voice, machines for the reception, images or other data, and the panel would determine whether India’s customs duties on imports of certain information and communications technology (ICT) products infringe WTO norms or not.

Conclusion

India’s purist approach to the multilateral trading system – a fair, open, transparent and balanced trading regime was in the interest of developing countries , and has always remained in WTO negotiations. India has also been opposed to expanding trade rules into areas such as labour standards, competition policy, government procurement, trade in investment and trade facilitation agreement. India has also raised its voice against rules that favour developing countries and are not in the favour of developing and undeveloped countries. India has also been impacted negatively by a lot of rules that WTO has proposed and a number of cases that are ongoing against it. But, WTO being an international institution keeping an eye on the world trade and trade practices, to some extent safeguard the interest of developing and non- developing countries.