- A World Trade Organization panel said that India had violated global trading rules in a dispute with the European Union, Japan and Taiwan over import duties on IT products.
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- The WTO panel recommends India bring such measures into conformity with its obligations under the General Agreement on Tariffs and Trade (GATT 1994).
- The panel further suggested that India should amend its tariffs on these products to align with global trading rules.
- The EU has also approached India to resolve the matter through a multi-party interim appeal arbitration arrangement (MPIA).
Why does the dispute arise?
- India, which is signatory to the 1996 Information Technology Agreement (ITA), is required to eliminate tariffs on a range of products, including mobile handsets.
- However, starting the 2007-08 Union Budget, India imposed tariffs on a clutch of electronic items to curb cheap electronic imports from China and promote India’s home-grown manufacturing.
- In 2019, the EU 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. Japan and Taiwan filed similar complaints that same year.
Impact of ruling
- Since the appellate body of WTO — its highest adjudicating authority — is dysfunctional due to the absence of judges, the adverse report of the dispute settlement panel will not have any immediate impact.
- The Commerce ministry said that India will appeal against this ruling.
How imposition of tariff benefitted India?
- It resulted in significant investments, including those from Apple and Foxconn.
- India became the second largest producer of mobile phones with a valuation of 5277 crore in FY22.
- The mobile phone exports crossed $10 billion in FY23.
MPIA (Multi-party interim appeal arbitration arrangement)
World Trade Organization (WTO)
Electronics Sector in India
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