Will WTO ruling scuttle plans for Make in India?

Source: The post is based on the following articles 

– “WTO panel rules against India in IT tariffs dispute with EU, others” published in The Hindu on 20th April 2023

– “Will WTO ruling scuttle plans for Make in India?” published in Livemint on 20th April 2023.

What is the News?

The World Trade Organization (WTO) has found India’s tariffs on mobile phones and electronic components inconsistent with global norms.

What is the WTO dispute about?

Over the last few years, India has imposed import duties on electronic items aimed at discouraging Chinese imports and promoting domestic IT manufacturing.

However, India is a signatory to the Information Technology Agreement(ITA) which requires it to eliminate tariffs on a range of tech products.

The European Union, China, Japan, Thailand, Singapore and the US have objected to duties on communication components like microphones and transmission apparatus. 

In 2019, the EU and other countries challenged India’s introduction of import duties of between 7.5% and 20% for a wide range of IT products, such as mobile phones and components, as well as integrated circuits, saying they exceeded the maximum rate.

What was the WTO panel’s ruling?

The WTO panel found that India’s tariffs on certain IT products violated global trading rules, as they were inconsistent with the terms of the Information Technology Agreement (ITA).

The ruling has highlighted the need for India to align its trade policies with global norms and obligations.

What is India’s stand on this?

India argued that at the time of signing the ITA, products such as smartphones did not exist and hence, it was not bound to eliminate tariffs on such items.

What is the next option for India now?

India will approach WTO’s appellate body, but it’s remained non-functional since 2019 as membership to the body has dwindled. 

The US has been blocking appointment of new members as it believes that WTO is biased against it. Therefore, several cases are pending.