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WTO panel rules against India in IT tariffs row with EU, others

  • Published
    18th Apr, 2023
Context

In a latest development, the 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.

What is the case?

  • The case pertains to import duties for a wide range of products. 
  • 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.
  • The EU deemed these duties a direct breach of WTO rules, and argued that India was obliged under the WTO commitments to apply a zero-duty rate to such products.
  • Japan and Taiwan filed similar complaints that same year.

The EU is India's third largest trading partner, accounting for 10.8% of total Indian trade in 2021, according to the European Commission.

Points made by WTO

  • In its panel ruling, the WTO upheld all EU claims against India and found that India's tariffs of up to 20 per cent on certain ICT products, such as mobile phones, were not in line with its WTO commitments, and thus are illegal.
  • The WTO panel recommended India to bring such measures into conformity with its obligations. 

Ket-terms

  • Import duty is a tax collected on imports and some exports by a country's customs authorities. A good's value will usually dictate the import duty. Depending on the context, import duty may also be known as a customs duty, tariff, import tax or import tariff.
  • Zero rate of duty: A zero rate of import duty means no protection for the domestic manufacturer.

What’s next for India?

  • India can appeal the WTO panel's decision.

What is the World Trade Organization?

  • WTO is a forum for governments to negotiate trade agreements. It’s a place for them to settle trade disputes. It operates a system of trade rules.
  • Currently, the WTO includes 164 Members (countries and customs territories), including Belarus’ partners within the Eurasian Economic Union. 24 countries, including Belarus, have observer status and are negotiating the terms of accession to the Organization.
    • India has been a WTO member since 1 January 1995.
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