India-EU $600mn WTO Dispute
Source: Indian Express
GS III: Economy
Overview
- News in Brief
- Impact on India
Why in the News?
Information communications technology (ICT) products and the European Union (EU) are the subject of a trade dispute that India is allegedly close to resolving.
News in Brief
- In this dispute, which dates back to 2019, Brussels contested India’s application of import tariffs on a range of ICT equipment, arguing that this went against international trade norms and adversely affected the EU’s €600 million worth of tech exports to India.
- This comes on the heels of India settling all seven trade disputes at the World Trade Organization (WTO) with its largest trade partner, the US.
- The dispute assumes significance as it was feared to affect India’s efforts to boost electronic products manufacturing.
Impact on India
- The decision is critical to India’s aspirations to increase the production of electronic products, a strategically important industry meant to lessen reliance on China.
- The success of India’s flagship production-led incentive (PLI) plan depends on the outcome; otherwise, it may have been impacted if the EU’s challenge had led to the removal of levies on ICT products.
India’s Perspective on Losses
- India informed the EU that the EU’s steel import restrictions were causing it to suffer similar losses.
- Aiming to stop a spike in US steel exports to the EU after contentious steel tariffs under the Trump administration, the EU placed particular restrictions and an additional 25 per cent import charges on the commodity.
Implications of Dispute Resolution
- The upcoming decision addresses several unresolved problems and comes after a high-level Trade and Tech Council (TTC) meeting between India and the EU.
- The World Trade Organization (WTO) lacks a viable dispute resolution system, which makes the TTC more significant because the EU only has a council with the US.
- Amid growing tensions with China, the TTC concentrates on developing technological collaborations.
India’s Trade Strategy and WTO Challenge
- India’s aim to improve the manufacturing of electronic devices included increasing levies on ICT items.
- This was mainly due to the production-linked incentive (PLI) scheme. India’s exports of goods have decreased overall, while its exports of electronic items have increased.
- Earlier in the year, India questioned the constitutionality of the WTO dispute resolution body’s judgment that favoured the EU, demonstrating its commitment to protecting its trade policy.
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