Currently nine trade disputes pending against India under WTO rules: Govt
India is facing nine pending disputes at the WTO, Parliament was informed on Tuesday. The cases, filed by countries including Japan, China, the EU, Brazil and Australia, cover steel, sugar, ICT tariffs and PLI schemes. India has spent about Rs 2.43 crore on legal defence so far.
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Context
The Government of India has informed Parliament that nine trade disputes are currently pending against India under the (WTO) Dispute Settlement Understanding. These disputes, filed by countries including Japan, Brazil, the EU, and China, challenge various Indian trade and industrial policies. The contested measures range from safeguard duties on iron and steel and agricultural subsidies for sugarcane to tariffs on Information and Communications Technology (ICT) goods and the (PLI) schemes.
UPSC Perspectives
Economic
This news highlights the ongoing friction between India's domestic industrial strategy, primarily the Atmanirbhar Bharat initiative, and its international obligations under the . A key conflict area is India's use of tariffs and subsidies to promote domestic manufacturing and protect specific sectors. For instance, the disputes concerning ICT products and (PLI) schemes touch upon the core of India's strategy to become a global manufacturing hub. Complainants argue that India's tariffs exceed the bound rates (the maximum tariff rate a WTO member commits to apply to a specific product) agreed upon in India's WTO schedule, allegedly violating the (GATT 1994). Furthermore, the challenge against the PLI schemes by China invokes the (ASCM) and the (TRIMs), questioning whether these incentives constitute illegal, trade-distorting subsidies that disadvantage foreign competitors. UPSC candidates must understand the delicate balance developing nations like India must strike between necessary protectionism for nascent industries and adherence to a rules-based multilateral trading system.
International Relations
The disputes reflect the broader geopolitical and trade dynamics where major economies frequently use the WTO dispute settlement mechanism to challenge policies they perceive as unfair. India's defense relies heavily on specialized bodies like the (CWS) and the (CTIL). A critical aspect of this situation is the systemic crisis within the WTO itself. The article notes that several of India's appeals remain pending due to the non-functioning of the WTO Appellate Body. This body has been paralyzed since 2019 because the United States has blocked the appointment of new judges, fundamentally undermining the two-tier dispute resolution system. Consequently, panel reports that are appealed enter a legal void, often referred to as 'appealing into the void.' This situation allows countries, including India, to maintain the disputed measures while the appeal is nominally pending, highlighting a significant vulnerability in contemporary global economic governance. Understanding this paralysis is crucial for GS Paper 2 questions on international institutions.
Agriculture
The specific disputes regarding sugarcane and sugar exports filed by Brazil, Australia, and Guatemala underscore the contentious nature of agricultural subsidies in global trade. These countries allege that India's domestic support mechanisms for sugarcane farmers—such as the Fair and Remunerative Price (FRP) fixed by the central government and State Advised Prices (SAP)—and related export subsidies violate the (AoA) and the ASCM. Under the AoA, developing countries are subject to limits on trade-distorting domestic support (the Aggregate Measurement of Support or AMS), generally capped at 10% of the value of production. Complainants argue India's support exceeds these de minimis levels. India defends its policies by asserting they are necessary for supporting small and marginal farmers and ensuring food security, framing them within its permissible rights under the WTO. This ongoing clash illustrates the inherent tension between global trade rules, largely shaped by developed nations, and the socio-economic realities of developing countries where agriculture supports a massive portion of the population. This connects directly to GS Paper 3 topics on farm subsidies and the WTO.