The World Trade Organization (WTO) panel has found that India’s tariffs on mobile phones and electronic components do not align with established global norms. This move has led to concerns about the impact on India’s ‘Make in India’ vision.
India’s Import Tariffs on Electronics
In recent years, India has imposed import duties on electronic goods as part of its attempt to reduce imports from China. However, many countries including the United States, China, and Japan have objected to India’s imposition of duties on communication components such as microphones and transmission devices.
WTO Ruling Against India’s Import Tariffs on Electronics
In April 2023, a WTO panel found that India’s tariffs on mobile phones and electronic components do not conform with international norms. India will approach the WTO’s appellate body, which has the authority to affirm, amend, or overturn the legal determinations and judgments made by a panel. However, the appellate body has been non-functional since 2019 due to the United States’ refusal to appoint members.
India’s Stance on the Issue
India denies the charges and argues that smartphones were not in existence when the Information Technology Agreement (ITA) was signed, and hence there is no basis for these charges. India has decided to go to the WTO’s appellate body against the panel’s verdict, which will buy India some more time.
Impact of the Issue
The final order will take a long time since the appellate mechanism is non-functional. Hence, the panel’s ruling will not have an immediate or near-term impact on the industry. However, this ruling might create a small dent on the ‘Make in India’ initiative, and foreign investors might become a bit cautious, leading to a slowing of FDI received in the information and communication technology sector. If the ruling affects India’s current duty structure, it could adversely impact the momentum of local value addition. If India loses the appeal in the future, it could lead to an even more severe impact.
Information Technology Agreement (ITA)
The ITA is a multilateral trade agreement negotiated under the WTO in 1996. It aims to promote free trade in information technology products among its signatory countries by eliminating tariffs and other trade barriers on a wide range of technology products, including computers, telecommunications equipment, semiconductors, and software.
Under the ITA, signatory countries agreed to eliminate tariffs on a wide range of information technology products, including advanced semiconductors, GPS navigation systems, and medical equipment. The agreement has been successful in promoting the growth of the global technology industry by lowering the cost of technology products and increasing access to technology across the world.
Why In News
In a recent development, the WTO panel has found that India’s import tariffs on mobile phones and electronic components do not align with the established global norms, sparking concerns about the impact on India’s ‘Make in India’ vision.
MCQs about Make in India
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What did the WTO panel find regarding India’s tariffs on mobile phones and electronic components?
A. They do not align with established global norms.
B. They align perfectly with established global norms.
C. They have not yet been evaluated by the WTO.
D. They are under review by the WTO appellate body.
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Why did India impose import duties on electronic goods?
A. To reduce imports from China.
B. To increase imports from Japan.
C. To comply with WTO regulations.
D. To increase domestic production of electronic goods.
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What is the WTO appellate body?
A. A permanent institution that reviews appeals arising from reports released by panels in disputes filed by members of the WTO.
B. An advisory board that recommends policy changes to the WTO.
C. A group of experts that assesses the economic impact of WTO policies.
D. A panel that investigates disputes between WTO member countries.
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What impact might the WTO ruling have on India’s ‘Make in India’ initiative?
A. It might create a small dent and lead to a slowing of FDI received in the information and communication technology sector.
B. It will have no impact on the ‘Make in India’ initiative.
C. It will accelerate the growth of the ‘Make in India’ initiative.
D. It will lead to a complete halt of the ‘Make in India’ initiative.
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