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India is weighing the possibility of offering the EU tariff concessions for certain ICT products, like mobile phones and base stations, as part of the India-EU Free Trade Agreement (FTA) being negotiated which could lead to an amicable settlement of the WTO dispute on the matter.
But the Commerce Ministry has not yet been able to bring the Ministry of Electronics and Information Technical (MeitY) on board, which is focused on promoting domestic production, and the matter is stuck at the moment, as per sources tracking the matter.
“The Commerce Ministry believes that one possible way of sorting out the WTO dispute with the EU on ICT tariffs would be to offer tariff concessions through the FTA. But MeitY is not too open to the suggestion yet. Discussions are on,” a source told businessline.
The EU, Japan, and Chinese Taipei had appealed to the WTO against import duties of up to 20 per cent, progressively imposed by India on certain ICT products, such as mobile phones and accessories and base stations, since 2014. They complained that this went against its commitments at the WTO. India had committed to zero duties on many ICT products under WTO’s IT Agreement.
On April 17, 2023, the dispute settlement panel of the WTO, in three separate judgements, ruled against India’s import duties and asked for a correction.
“India continues to hold that the items on which it has imposed import duties are not covered under the IT Agreement and the complainants were also trying to take advantage of a technical error made by the country while updating its tariff lines. It, therefore, decided to go the Appellate Body to appeal against the judgements,” the official said.
Although India has appealed to the Appellate Body against the panel’s judgement related to Japan’s case, it mutually decided with the EU to have more discussions to sort out the case filed by the bloc before escalating it to the Appellate Body level.
“Once a case goes to the Appellate Body, it is known that nothing will come out of it for a long time as the judges’ appointment is in suspension. That’s why the EU wants to sort it out through mutual discussions,” he said.
As per EU’s calculations, the amount of EU exports of such technology affected by India’s duties is up to €600 million annually. “While this is already significant, the real impact on European companies, which also export from other countries to India, is considerably higher,” according to an EU statement.
Since India is already negotiating an FTA with the EU, which happens to be one of its top export destinations, one way to appease the bloc without upsetting the applecart could be by offering tariff concessions on the affected ICT products as part of the pact, the source said.
MeitY, however, is not very receptive to the idea as it believes that it would defeat the very purpose of the duties which was to encourage domestic production of the ICT products like mobile phones.
“The India-EU FTA discussions are expected to go on for some time. But India and the EU have time till September 19 to decide on the fate of the dispute at the WTO. Some decisions need to be taken fast,” the source said.
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