By Devanshee Dave
Last month, the Indian Government increased the import duties on some electronic products, a move which has attracted questions about its compliance with the Information Technology Agreement (ITA) of the World Trade Organization. Japan, the European Union, and the United States have all asked for an explanation from the Indian Government.
Modi’s protectionist moves
Prime Minister Narendra Modi launched the ambitious project ‘Make in India’ to encourage investment in the country and to turn it into a manufacturing hub. As part of this project, the Indian Government raised the import duty last month on some electronic goods like television sets, mobile phones, digital cameras, microwave ovens and LED bulbs. The import duty on smartphones was raised to 15%, while the duty charged on LED bulbs and custom television sets was increased to 20%. The aim is to make it costlier for customers to import these goods in order to boost local manufacturing.
This move by the Indian Government has attracted the attention of other members of the WTO. Japan, the European Union, and the US have claimed that India cannot increase import duties on the electronic items as this falls under the Information Technology Agreement which India is a party to.
It is not the first time that the members of the WTO have asked India for an explanation. Last year in May, when India increased the import duty on mobile phones, Taiwan, Canada, Singapore, Norway, Switzerland, and Thailand ,all had raised concerns. At that time, the government followed the opinion of the Attorney-General who claimed that items that fall under the New Items’ category, such as mobile phones, appeared after the agreement was signed in 1997 and thus the new duties do not violate the agreement.
China has not questioned the move
Along with India, China has also been questioned by WTO members for imposing custom duties on electronic items. However, China is also the largest exporter of the electronic goods imported by India, yet China has not questioned India’s right to impose the duty. The reason behind this is the Chinese strategy of leaping the tariffs. According to Biswajit Dhar, a professor of Jawaharlal Nehru College, “Chinese language firms have set store right here they usually convey elements in fully knocked down situation right here. This can be a case of tariff leaping as they assemble telephones after importing elements.”
It is crucial for the Indian Government to give a reasonable and convincing explanation to the World Trade Organization. If India were to fail to do so, the issue would be diverted to the dispute settlement department of WTO. This would be an unwise course for the government to pursue, as the committee members at the WTO would then make the decision as to whether or not India is meeting the WTO’s Information Technology Agreement guidelines.
Featured Image Source: Flickr
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