Sistema de comércio internacional na índia

Sistema de comércio internacional na Índia
Índia e o sistema de comércio internacional.
PRADEEP S. MEHTA e CHENAI MUKUMBA.
A fim de navegar com sucesso na arena do comércio internacional, o novo governo da Índia será encarregado de aumentar o papel crescente da Índia no sistema de comércio internacional para atingir seus objetivos domésticos e internacionais. À medida que a paisagem geoeconômica teve uma mudança nos últimos anos, as economias emergentes começaram cada vez mais a desempenhar um papel mais pronunciado em uma série de questões econômicas globais e, como a quarta maior economia do mundo, o papel da Índia neste sistema tornou-se mais proeminente .
Na mais recente conferência ministerial da OMC em Bali, na Indonésia, no início de dezembro de 2018, o crescente papel da Índia como voz para os pobres foi ampliado enquanto lutava para assegurar que o resultado favorecesse não apenas os pobres dentro de suas próprias fronteiras, mas aqueles dos países em desenvolvimento também. Embora os membros realmente tenham chegado a um consenso após uma semana prolongada de negociações, o grande esforço refletiu o problema muito maior de não só interesses divergentes entre diferentes grupos de países, mas sim o alinhamento dos objetivos de desenvolvimento doméstico com os compromissos comerciais internacionais. Enquanto o primeiro desafio exigirá a vontade política combinada de todos os membros da OMC, o segundo terá que ser abordado pelos líderes dos países dentro de suas próprias fronteiras. Trata-se de enfrentar este segundo desafio que o novo governo da Índia precisará pensar estrategicamente para aproveitar os benefícios do sistema comercial internacional, a fim de alcançar seus objetivos nacionais.
A abordagem da Índia para a promoção do comércio seguiu uma abordagem em duas vertentes, lidando tanto com as restrições do lado da oferta como do lado da demanda. Pretendia implementar as políticas domésticas para melhorar a sua capacidade de abastecimento e, em segundo lugar, abordar o lado da procura da promoção do comércio através de negociações comerciais internacionais para garantir um melhor acesso ao mercado. Embora o último tenha sido alcançado pelo envolvimento da Índia nas negociações comerciais multilaterais e plurilaterais, o primeiro foi realizado através da Política Nacional de Comércio Exterior da Índia (NFTP), adotada a cada cinco anos, e aumentada com suplementos anuais para agilizar a política e assim desenvolver uma capacidade comercial mais abrangente e melhor.
Uma complementaridade entre esses dois aspectos é, portanto, imperativa. No entanto, no passado, o planejamento e a administração de instrumentos de política no âmbito do NFTP muitas vezes tomou seu próprio curso sem uma análise minuciosa das necessidades setoriais que obtêm acesso preferencial ao mercado através de acordos comerciais. Estudos recentes realizados pela CUTS International indicam que a Índia tem imenso potencial comercial com seus países vizinhos em muitos setores e produtos. No entanto, a maioria desses produtos não está incluída na lista de mercados focais e produtos de foco selecionados no atual NFTP da Índia. 1 De fato, para fortalecer o funcionamento do NFTP, é necessária uma melhor coordenação entre o NFTP e outras políticas domésticas, inclusive com os governos estaduais.
É necessário concentrar mais atenção na interface entre o comércio e outras políticas, como competição, padrões, compras governamentais e fabricação para assegurar a coerência das políticas. Incidentes, como, por exemplo, quando os produtos com alta demanda de importação em países com os quais a Índia tem acordos comerciais formais não recebem assistência, dado que os produtos de foco refletem a falta de coerência política com outras estratégias governamentais. Aqui está um dos principais desafios e oportunidades que o novo governo da Índia deve enfrentar.
Os instrumentos que influenciam o desempenho comercial podem ser divididos em três categorias: (a) esquemas que pertencem ao desenvolvimento das capacidades de produção dentro dos países; (b) a redução dos custos comerciais facilitando o movimento dos resultados dessas operações produtivas através das fronteiras; 2 e (c) atividades de promoção de exportação, que incluem a identificação do processo formal de exportação, identificando potenciais mercados no exterior após a conclusão de acordos de comércio livre, estudando seu perfil de demanda específico e encontrando parceiros comerciais específicos. 3 Uma política de comércio exterior estratégica e abrangente que incorpora essas três características desempenhará um papel crucial na consecução dos objetivos nacionais da Índia nos próximos cinco anos.
Nos últimos anos, a CUTS International tem se envolvido em pesquisas que proporcionaram a oportunidade de atuar como um canal que liga aqueles que enquadram o NFTP para os afetados por ele. O processo atual de formulação de políticas comerciais nacionais da Índia tende a ser centralizado e ainda não existem canais estabelecidos de comunicação entre os beneficiários das bases e os formuladores de políticas. Durante a nossa pesquisa, identificamos cinco áreas prioritárias que o governo entrante precisará abordar para maximizar os benefícios do NFTP da Índia nos próximos anos: (i) inclusão em relação às PME (pequenas e médias empresas) como principais beneficiários; (ii) coordenação com negociações comerciais externas; (iii) ligações entre NFTP e política de IDE; (iv) papel do NFTP na exploração e fortalecimento da participação de unidades de negócios indianas em cadeias de valor regionais / globais; e (v) o papel do NFTP na política interna e as reformas regulatórias para uma melhor governança econômica. 4.
A Política de Comércio Exterior da I ndia 2009-14 foi formulada com o objetivo de duplicar as exportações de bens e serviços da Índia até 2018, ao mesmo tempo em que visa duplicar a participação da Índia no comércio global até 2020. 5 NFTP 2009-14 e seus suplementos anuais contêm vários desses especificamente esquemas específicos, feitos sob medida para usar a expansão do comércio no setor de bens de uso intensivo de mão-de-obra como um instrumento para geração de emprego. Estes objectivos foram previstos através da utilização de incentivos fiscais, reembolso total de impostos e taxas indirectas, medidas institucionais, alterações nos procedimentos, aumento do acesso ao mercado em todo o mundo, diversificação dos mercados de exportação e melhoria da infra-estrutura, a fim de reduzir os custos de transação. No entanto, a política não tinha certas características de suporte que teriam facilitado a inclusão e o acesso a um conjunto maior de partes interessadas.
A implementação de tais esquemas muitas vezes não possuía inclusão, resultando em pequenos e médios operadores e empresas (PMEs), muitas vezes, não conseguem acessar os benefícios. Um dos principais desafios enfrentados pelas PME, particularmente no setor informal, é a falta de consciência e compreensão de como operar no ambiente comercial internacional. Em países em desenvolvimento como a Índia, as partes interessadas nas bases geralmente desconhecem os vários esquemas de apoio oferecidos pelos próprios governos. Por isso, para criar um NFTP mais inclusivo, devem ser implementadas medidas para assegurar uma maior conscientização sobre os esquemas e instrumentos de políticas do NFTP por parte das partes interessadas do nível local.
Um conhecimento e, em certos casos, abordar o conflito de interesses enfrentado por determinadas partes interessadas é imperativo para garantir um NFTP inclusivo. Os interesses de diferentes partes devem ser levados em consideração ao avaliar o NFTP e sugerir mudanças. Isso requer um maior esforço para aumentar a interação com atores subnacionais, como os governos estaduais, na implementação do NFTP da Índia. O Conselho Inter-State Trade, entre outros, pode desempenhar um papel fundamental para assegurar um diálogo contínuo entre os governos estaduais e os territórios sindicais. A revitalização de tais grupos poderia desempenhar um papel necessário e fundamental no aconselhamento do Governo da Índia sobre medidas para proporcionar um ambiente de comércio internacional propício nos próprios Estados. Isso proporcionaria um quadro para que os estados fossem parceiros no comércio internacional e nos esforços de exportação. 6 As células estatais da OMC também poderiam ser fortalecidas para gerar consciência de atores subnacionais sobre a política comercial da Índia e outros assuntos relacionados.
Em segundo lugar, o exame das tendências recentes para o que comumente se conhece como acordos comerciais mega-regionais mostra que os países emergentes, incluindo a Índia, se encontram excluídos dessas negociações. Embora tenha havido muita especulação sobre por que os membros foram deixados de fora, esses países, no entanto, precisam adotar uma abordagem pró-ativa para gerenciar essa mudança atual, a fim de evitar a contração da exclusão, como o desvio de comércio, bem como o estabelecimento de regras de comércio internacional fora da OMC. Tendo em conta os seus interesses nacionais, é imperativo que a Índia continue com o mandato de negociar acordos comerciais tanto a nível multilateral como bilateral e regional.
Existe a necessidade de ressuscitar e ampliar o mandato de órgãos como o Comitê Consultivo Nacional (agora extinto) sobre Comércio Internacional, para ajudar a realizar revisões periódicas do impacto dos acordos comerciais sobre a economia indiana. Há evidências suficientes para mostrar que os atuais acordos comerciais da Índia não conseguem tirar proveito de suas competências essenciais. Portanto, no futuro, os mecanismos para realizar avaliações de impacto de sustentabilidade para entender a sustentabilidade econômica, social e ambiental de futuros acordos comerciais são necessários para desenvolver as posições de negociação da Índia.
Por outro lado, é importante alinhar a política de comércio exterior da Índia com a política de IDE à luz de importantes vínculos atrasados ​​e avançados que existem entre os setores relacionados ao comércio e o IED. Dada a posição da Índia ao longo de sua trajetória de desenvolvimento, ela está preparada para se beneficiar não só do IDE de busca de eficiência que busca localizar o processo de produção em regiões de baixo custo, mas também buscando IED no mercado. Embora o NFTP realmente tenha aberto certos setores, esse objetivo não se refletiu de forma semelhante na política do IDE da Índia e, portanto, resultou em uma utilização subóptima desta política. Devido ao fato de que as empresas estão desarmando não só seus processos de fabricação, mas também suas funções comerciais, há um aumento nos fluxos de IED que são direcionados para setores terciários e não apenas setores secundários. Dada a força da Índia neste setor, uma política de IDE que incorpora a vantagem comparativa da Índia nesta área poderia aumentar a competitividade das exportações. Atrair o IDE no desenvolvimento do cluster ou nos corredores econômicos também poderia ajudar a alinhar a política da NFTP e do FDI na Índia.
Por outro lado, as cadeias de valor globais (GVCs) continuam a ser uma área que a Índia não explorou adequadamente. Houve pouca discussão sobre como políticas e instrumentos contidos no NFTP podem ser usados ​​para facilitar a participação de unidades de negócios em cadeias de valor regionais e GVCs. Os GVC surgiram pela primeira vez como cadeias de abastecimento regionais no Leste Asiático, com os investidores japoneses assumindo a liderança. Essa fragmentação da produção melhorou a competitividade de custo dos produtos finais, que então conseguiram competir com produtos de outros países desenvolvidos. Ao longo do tempo, multinacionais de outros países desenvolvidos se mudaram para a região para melhorar sua competitividade em termos de custos. O que emergiu desse fenômeno foram os GVCs com produção espalhada por países, regiões e continentes, reunindo vantagens de custo para se tornar globalmente competitivas. 7 Enquanto a Índia é um dos 25 principais países exportadores do mundo, tem uma das menores partes do comércio de valor agregado estrangeiro em apenas dez por cento e a menor taxa de participação da GVC. 8 O NFTP poderia desempenhar um papel fundamental na exploração e fortalecimento da participação das unidades de negócios indianas em cadeias de valor regionais e globais para permitir aproveitar o grande potencial de crescimento nesta área.
Por último, o NFTP precisa desempenhar um papel na política interna e nas reformas regulatórias para uma melhor governança econômica. Embora vários países desenvolvidos tenham utilizado com sucesso seus instrumentos de política de comércio exterior para melhorar a governança econômica doméstica em geral, na Índia o NFTP é freqüentemente abordado como uma política autônoma. A coerência entre o NFTP e outras grandes políticas macroeconômicas é crucial para a política interna e as reformas regulatórias para garantir a complementaridade entre todas as principais políticas macroeconômicas.
A política de fabricação da I ndia é um exemplo de uma iniciativa macroeconômica que o governo levou ao aumento da porcentagem de manufatura do nível atual de 15% para 25% do PIB até 2025. No entanto, uma maior coerência com o NFTP ajudará a melhorar contribuição do setor para o crescimento do PIB que permaneceu estagnado nos últimos anos. Do mesmo modo, embora as regras de contratos públicos existentes sigam o princípio da não discriminação que está em consonância com o compromisso da Índia na OMC, uma política de contratos públicos transparente, competitiva e justa asseguraria uma melhor acessibilidade do mercado, bem como a reciprocidade para que os fornecedores nacionais se aventurem outros mercados de compras governamentais. As reformas institucionais e macroeconômicas, que buscam melhorar o clima dos negócios e proporcionar uma base melhor para a economia gerar crescimento e competitividade, devem garantir que as empresas possam aproveitar o alinhamento das oportunidades comerciais. 9.
A segunda abordagem em duas vertentes da Índia para a promoção do comércio é alcançada pelo seu envolvimento nas negociações comerciais multilaterais, preferenciais e plurilaterais. A eficácia de uma política doméstica sólida melhora se for acompanhada por uma estratégia externa coerente que permita aproveitar os benefícios do sistema comercial internacional. Enquanto a Índia seguiu inicialmente uma política econômica fechada, após as reformas econômicas, a participação da Índia na arena econômica global aumentou enormemente. Depois de liberalizar sua economia e se juntar à OMC em 1994, a Índia é protagonista do sistema multilateral de comércio. No entanto, à medida que a paisagem global mudou com a proliferação de acordos comerciais preferenciais, a Índia também começou a participar desses acordos comerciais preferenciais. Em parte, isso estava refletindo uma tendência global para postar os problemas com a Rodada de Doha. Mas igualmente, o sucesso do primeiro FTA da Índia com o Sri Lanka em 1999 introduziu uma nova atitude em relação à interação com seus parceiros comerciais e o sistema de comércio global como um todo. Hoje, a Índia assinou cerca de 15 PTAs e muitos mais estão no pipeline.
N, no entanto, a Índia continua excluída dos principais acordos comerciais mega-regionais que estão se tornando uma característica proeminente do ambiente comercial atual. Esses acordos de comércio livre podem representar uma ameaça à sua segurança econômica. A busca da Índia por seu próprio acordo comercial mega-regional, ou seja, o Acordo de Parceria Econômica Global Regional (RCEP), é um movimento único de sua parte para combater os impactos negativos que poderiam resultar desses ALCs, bem como estabelecê-lo como um poder regional. Os benefícios desse acordo comercial são imensos. Fornece uma oportunidade para que a Índia se integre mais nas redes regionais de produção, consolide os TLC sobrepostos na região e, assim, aumente as oportunidades de comércio e desenvolvimento na região e permita a congruência com a política externa Look East.
A política de comércio exterior da Índia também precisa ter em mente seus interesses estratégicos e de segurança. Para desempenhar um papel correspondente ao seu tamanho e potencial, a Índia precisa reforçar todos os elementos do seu poder estatal, não apenas econômico, mas também militar. A Índia também deve garantir que siga uma política comercial estratégica no que se refere ao fornecimento de acesso ao mercado específico para alguns dos seus parceiros comerciais críticos, de quem pode garantir tecnologias novas e possivelmente duplas para a produção de defesa indígena. Durante um período de tempo, essa política comercial estratégica poderia ajudar o país a desenvolver um complexo militar-industrial, gerando oportunidades de emprego e garantindo uma melhor relação comercial.
Enquanto a Índia continua a ser um dos maiores usuários finais de equipamentos de defesa, um país com o terceiro maior grupo de mão-de-obra técnica e talento científico do mundo, e com um histórico de excelência na tecnologia de tecnologia de ponta, nuclear, tecnologia da informação, ainda depende de fontes estrangeiras para atender 70 por cento dos seus requisitos de defesa. 10 Simultaneamente, tem que atuar em conjunto com uma Autoridade Nacional de Compensação sob uma abordagem de todo o governo para poder capturar acordos intersetoriais ao negociar com fornecedores de equipamentos de defesa estrangeiros.
Para resolver eficazmente questões específicas de desenvolvimento, o NFTP da Índia exige uma abordagem de todo o governo. Na busca do interesse nacional geral de um país, as agências governamentais não podem funcionar como entidades separadas. Uma abordagem de todo o governo requer uma coordenação complexa para resultados ótimos. Este método foi concebido para estabelecer uma abordagem comum e a compreensão da resolução de problemas no que é comumente referido como coerência política.
Para garantir essa abordagem coordenada na formação e implementação da política comercial da Índia, incluindo a negociação de acordos comerciais, o Departamento de Comércio, o Departamento de Receita e o Ministério dos Negócios Externos precisam trabalhar em conjunto. O Conselho Inter-State Trade e as células estatais da OMC também precisam ser efetivamente integrados na formulação de políticas para assegurar um maior envolvimento com os governos estaduais e um melhor buy-in político para a política comercial da Índia.
Para navegar com sucesso na arena do comércio internacional, o novo governo da Índia precisará abordar as cinco lacunas, conforme descrito acima. Um NFTP inclusivo que não é projetado como uma política autônoma, mas está estrategicamente integrado em todos os aspectos da política externa indiana, tem potencial para ajudar a Índia a alcançar seus objetivos domésticos e internacionais. À medida que o papel da Índia na economia global continua a crescer, a possibilidade de obter mais benefícios da arena internacional para ajudar a alcançar seus objetivos domésticos está aumentando e um NFTP bem equilibrado pode ajudar a atingir esse objetivo. É imperativo que a próxima Política de Comércio Exterior (2018-19) inclua não apenas uma gama de instrumentos de política que possam ser ajustados aos choques macroeconômicos e aos efeitos da onda das economias externas, mas também instrumentos que operam perfeitamente com outras políticas macroeconômicas domésticas para funcionar como um instrumento de política de incentivo ao bem-estar. 11.
1. CUTS, "Grassroots Reach Out of National Foreign Trade Policy: Evidências dos estados indianos." Disponível em: cuts-citee. org / pdf / Grassroots_Reachout_of_Foreign_Trade_Policy. pdf, 2018.
2. Os custos comerciais podem ser definidos como os custos incorridos na obtenção de bens para o usuário final, além do custo marginal de produção dos bens. As questões relacionadas ao custo comercial abrangem tarifas, impedimentos não tarifários, custos de transporte, frete e custos de tempo.
3. O. Cadot, e outros, "Onde gastar o próximo milhão? Aplicando avaliação de impacto para assistência comercial. 'Disponível em: voxeu. org / sites / default / files / file / next_million_WB. pdf.
4. CUTS, 'Dimensões de Desenvolvimento da Política Nacional de Comércio Exterior da Índia'. Disponível em: cuts-citee / NFTP /, 2018.
5. Estratégia para duplicar as exportações nos próximos três anos (2018-12 a 2018-14), Governo da Índia, Ministério do Comércio e Indústria, Departamento de Comércio. Disponível em: commerce. nic. in/ann/StrategyPaper. pdf, acessado em 12.12.2018.
6. Governo da Índia (DGFT), "Constituição do Conselho Inter-State Trade". Disponível em: dgft. gov. in/exim/2000/istcouncil. pdf.
7. R. Banga, "Medindo o Valor em Cadeias de Valor Global", UNCTAD. Disponível em: unctad / en / PublicationsLibrary / ecidc2018misc1_bp8.pdf.
8. UNCTAD, "Cadeias de Valor Global e Desenvolvimento, Investimento e Comércio de Valor Agregado na Economia Global". Disponível em: unctad / en / publicationslibrary / diae2018d1_en. pdf.
9. A. Rodriguez-Clare, "Falhas de Coordenação, Clusters e Intervenções Microeconômicas", Banco Interamericano de Desenvolvimento, documento de trabalho nº 544, 2005.

Dilema da política comercial da Índia e o papel da reforma doméstica.
Hardeep S. Puri.
A Índia enfrenta desafios significativos na área da política comercial e mdash; a desaceleração econômica global, o protecionismo crescente, os negócios mega-comércio paralisados ​​que poderiam, no tempo, ser reavivados e, talvez, mais importantes, suas próprias preocupações domésticas. Para que a Índia atinja seus objetivos políticos, o governo e a indústria, em particular o setor manufatureiro, devem se preparar para oportunidades e maior envolvimento em uma arena de comércio multilateral em evolução. As prioridades da Índia devem incluir a tomada de medidas políticas para se adequar aos padrões globais e apoiar a Organização Mundial do Comércio (OMC) para relançar as negociações multilaterais.
A Política de Comércio Exterior da Índia visa (1) aumentar a participação do país no comércio global dos atuais 2,1% para 3,5% e (2) o dobro de suas exportações para US $ 900 bilhões até 2020. No entanto, a Índia enfrenta muitos obstáculos: a falta de compreensão completa da política comercial e seus benefícios potenciais, um setor industrial pouco desenvolvido, resultados insatisfatórios de acordos comerciais regionais e relações restritas, inclusive com seus principais parceiros comerciais. O quadro da política comercial da Índia deve ser apoiado por reformas econômicas que resultam em uma economia indiana aberta, competitiva e tecnologicamente inovadora. A participação da fabricação no produto interno bruto precisa crescer através da implementação eficiente de esquemas como a iniciativa Make in India. O capital e a inovação dos EUA precisam trabalhar de mãos dadas com recursos indianos e empreendedorismo.
Como chegar lá.
Crie uma parceria global duradoura com os principais parceiros comerciais da Índia, particularmente os Estados Unidos. Os dois países, juntamente com outros países, devem trabalhar para quebrar barreiras ao movimento de bens e serviços e apoiar uma integração mais profunda nas cadeias de suprimentos globais. Participar ativamente e com entusiasmo na Parceria Econômica Regional Integral e procurar unir-se à Cooperação Econômica Ásia-Pacífico. Dado que a Índia não é parte de nenhum acordo de mega-comércio (e talvez nunca seja), isso seria uma parte importante de uma agenda de política comercial positiva. Ajustar imediatamente os padrões globais sobre barreiras técnicas ao comércio e medidas sanitárias e fitossanitárias. Com alguns negócios comerciais atualmente em espera ou não avançando em sua forma atual, a Índia, particularmente a indústria, tem um tempo valioso para se adequar a esses padrões. Revive o primado do sistema multilateral de comércio. Este avivamento é o interesse nacional da Índia, uma vez que o país é melhorado pelo tratamento da nação mais favorecida, em grande parte fornecido pelos sistemas de comércio multilateral ancorados na OMC. Ao contrário dos acordos plurilaterais externos, a OMC oferece o melhor cenário possível para a prossecução de uma agenda comercial baseada no desenvolvimento.
Introdução.
De acordo com o ex-primeiro-ministro da Singapura, Goh Chok Tong, a Índia atualmente tem o potencial de iniciar uma economia global estagnada, como a China fez há dez anos. 1 Mas, dado que a Índia enfrenta enormes desafios de desenvolvimento, esta é uma avaliação realista? Com 1,3 bilhão de pessoas e uma economia de US $ 2 trilhões, 2 o país tem mais pessoas pobres que as de todos os países subsaarianos. 3 Entre 1991 e 2018, a economia da Índia produziu apenas 140 milhões de empregos, uma fração dos mais de 300 milhões necessários; 4 e enquanto 1 milhão de pessoas estão atualmente entrando na força de trabalho todos os meses 5, a presença de 17,7 milhões de desempregados é uma bomba de tempo que nenhum governo pode ignorar. 6.
Em comparação, a China levantou centenas de milhões de seus cidadãos da pobreza, aumentando a renda per capita de US $ 873 em 1999 para US $ 8.027 em 2018. 7 A força do setor manufatureiro da China e um cenário de política comercial favorável tornaram possível esta notável transformação . Em 1995, quando a China entrou na OMC, suas exportações foram de cerca de US $ 149 bilhões, 8 com um superávit comercial de quase US $ 20 bilhões. 9 Até 2018, as exportações da China subiram para US $ 2,3 trilhões, 10 com um superávit de US $ 382 bilhões. 11 O crescimento econômico da China representou mais de três quartos da redução global da pobreza, permitindo que o mundo alcance o Objetivo de Desenvolvimento do Milênio das Nações Unidas de reduzir para metade a pobreza global até 2018. 12.
A Índia é capaz de realizar feitos semelhantes de crescimento econômico e integração na economia global? Seu setor de manufatura pode se tornar um grande produtor de empregos e bens comercializáveis? Pode aproveitar todas as oportunidades que a arquitetura de negociação global em evolução possa oferecer?
A Parceria Transpacífica (TPP) e a Transatlantic Trade and Investment Partnership (TTIP) & mdash, enquanto ambas se derrubaram e não são as únicas manifestações desta arquitetura em evolução. Vários acordos de livre comércio regional (regional) e sub-regional (ALC) já estão em vigor ou provavelmente evoluirão. Para maximizar as oportunidades dentro desse ambiente, a Índia terá de superar os desafios importantes da política comercial: questões domésticas; a situação global em evolução; e a necessidade de uma agenda de política comercial positiva, como talvez a única via viável para que a Índia melhore sua relação econômica com os principais parceiros comerciais. Os Estados Unidos e a América do Norte, de longe, a maior economia do mundo, continuarão a definir a agenda da política de comércio global, e os próprios Estados Unidos terão de reformular alguns dos seus objetivos de política comercial à luz dos desenvolvimentos recentes. Não obstante, os Estados Unidos ainda determinarão a agenda comercial, mesmo que seja criado um vácuo na liderança na OMC. A Índia poderia, se agir com sabedoria e de forma empreendedora, aproveitar esse vácuo.
O enigma indiano.
O maior desafio para o desenvolvimento de uma política comercial forte na Índia é o setor de fabricação mal desenvolvido. Apesar de ter crescido depois que a Índia se embarcou em uma liberalização econômica focalizada em 1991, a parcela de fabricação do Produto Interno Bruto (PIB) caiu para 16,2 por cento em 2018 e em 2018 e foi o que era em 1989 e 1990 (16,4 por cento). 13 A questão de como aumentar substancialmente a participação na fabricação é difícil, sem respostas fáceis. As restrições incluem a disponibilidade limitada de energia e terra, falta de acesso à tecnologia, baixa produtividade, aumento do custo do trabalho e dificuldades de negócios. Progresso foi feito, mas foi insuficiente. De longe, o impedimento mais grave para o avivamento do setor de manufatura é a escassez de terras.
O maior desafio para o desenvolvimento de uma política comercial forte na Índia é o setor de fabricação mal desenvolvido.
Na última década, a Índia assinou acordos de comércio livre com a Associação das Nações do Sudeste Asiático (ASEAN), a República da Coréia, o Japão e a Malásia. No entanto, alguns insiders admitem que os parceiros comerciais da Índia ganharam mais com esses acordos do que a Índia. 14.
A experiência da Índia com os acordos comerciais regionais (RTAs) foi menos do que satisfatória por causa da falta de competitividade do setor manufatureiro e da falta de inovação e investimento em setores como têxteis, vestuário e produtos farmacêuticos. Isso resultou em pouco entusiasmo pela adoção de uma postura de política comercial mais ativista dentro do governo, grupos de reflexão e comunidade de políticas comerciais. As dúvidas quanto à atractividade dos acordos comerciais internacionais aumentam quando as preocupações globais com a imigração provocam que outros países rejeitem a demanda da Índia para o movimento mais livre de profissionais (Modo 4 do Acordo Geral sobre Comércio de Serviços [GATS]).
Não obstante esses desafios e duvidas, juntar-se a RTAs poderia trazer benefícios inconvenientes para a Índia. Talvez, o mais importante, faria com que os bens e serviços do país fossem mais competitivos, porque forçaria a indústria indiana a se adaptar aos padrões internacionais em barreiras técnicas ao comércio e restrições sanitárias e fitossanitárias, um ativo inestimável a longo prazo.
O verdadeiro desafio na Índia. . . é a falta de plena compreensão dos benefícios da liberalização do comércio, da paralisia política e, consequentemente, da falta de vontade política.
O verdadeiro desafio na Índia, como em vários outros países, é a falta de plena compreensão dos benefícios da liberalização do comércio, da paralisia política e, consequentemente, da falta de vontade política. Criar uma política comercial bem-sucedida exige uma compreensão da geopolítica e das tendências econômicas globais e da capacidade de negociar vantajosamente. A negociação efetiva só é possível se os decisores tiverem confiança e capacidade para executar as necessárias reformas domésticas correspondentes, algumas das quais exigem ajustes dolorosos.
Ao longo dos anos, a Índia prestou atenção insuficiente ao valor da política comercial. Em 1996, por exemplo, ficou claro que o fim das cotas no âmbito do Acordo Multifibras em 2005 beneficiaria os países em desenvolvimento exportadores mais competitivos e que a modernização da indústria doméstica da Índia era, portanto, crítica. Muitas ações políticas que o governo do Partido Bharatiya Janata empreendeu em 2018, como o esquema de devolução do direito, foram sugeridas em 1996. A paralisia das políticas, a falta de vontade e talvez até a falta de compreensão completa impediram que as medidas necessárias fossem tomadas em 1996. Foram tomadas medidas oportunas, a participação da Índia no comércio global de têxteis e roupas se tornaria muito maior. Em vez disso, Bangladesh, China e Vietnã foram os grandes beneficiários do fim do regime de cotas. Entre 2000 e 2018, a participação da China nas exportações globais aumentou de 10% para 36% em têxteis e de 18% para 39% em vestuário. 15.
A Índia não pode servir os seus interesses econômicos ao permanecer indiferente ou totalmente à resistência à evolução da política comercial global e aos blocos de mega-negociação que podem se desenvolver. Como o professor da Universidade Jawaharlal Nehru, Biswajit Dhar, observa: "A longo prazo, nenhuma grande economia pode permanecer sem influenciar por eles porque o regime de regras discriminatórias terá consequências sobre o comércio com economias até mesmo não-membros". 16.
Assim, o principal desafio para a política comercial indiana é como reviver o sistema de comércio multilateral moribundo ancorado na OMC. Pode ser no interesse da Índia incentivar mudanças para a OMC, desencorajando a liberalização do comércio através apenas dos ACR e dos ALC.
Para efetuar tal mudança, a política comercial da Índia precisa ser ousada e imaginativa. Deve iniciar consultas intensivas e abrangentes entre os países comerciantes da OMC. Dependendo do resultado das consultas, deve apresentar propostas concretas para iniciar negociações na OMC, incumbindo os países desenvolvidos de reagirem às propostas da Índia. As propostas podem ter que lidar com as questões espinhosas da agricultura, o Modo 4 do AGCS e alguns acordos plurilaterais, como o Acordo de Tecnologia da Informação (ITA-2), contratos governamentais e solução de controvérsias.
A política comercial da Índia precisa ser ousada e imaginativa. It should start intensive and wide-ranging consultations among trading countries within the WTO.
India’s interest is in most-favored-nation (MFN) trade and the security and predictability associated with the multilateral trading system anchored in the WTO. Ensuring both requires that India not be viewed as a spoiler, as it currently is, in Geneva.
India’s Past and Present Approaches to Trade Agreements.
In 1982, the United States made a determined push to get trade in services included in the General Agreement on Tariffs and Trade (GATT), which was essentially a legal framework covering trade in goods and the imposition of border measures (tariff and nontariff). A discussion between William Brock (the U. S. trade representative) and Shivraj Patil (the Indian minister of state for commerce) at the 1982 GATT Ministerial Meeting is worth recalling. Representing the United States were Michael Smith (the U. S. ambassador to GATT) and Andrew Stoler (who later became a deputy director-general at the WTO). On the Indian side were the late Abid Hussein (then commerce secretary), B. L. Das (India’s ambassador to GATT), and the author of this paper. After a brief exchange of pleasantries, Brock enquired, “Mr. Minister, what is India’s position on services?” Patil said, “Nonnegotiable.” “In that case,” responded Brock, “I don’t see why I should be wasting your time and mine.” That was the India of Indira Gandhi. India’s firm stand resulted in a diluted ministerial decision. Given that services account for nearly 57 percent of India’s GDP today, it is arguable whether India made the right decision at the time.
In contrast, at the 2018 WTO Ministerial Conference in Nairobi, the Indian representative sat through the deliberations of the select group, acquiesced in the evolution of the package outcome, and then expressed disappointment after the results were gaveled. The WTO operates on the basis of consensus. Any country can block the outcome if it considers it unacceptable. 17.
Successive rounds of trade liberalization under the GATT and the WTO have resulted in the lowering of MFN tariffs, although there is still a significant differential between the bound and effective rates. In 1990–1991, for instance, the highest Indian tariff stood at 355 percent, and the weighted average tariff stood at 87 percent. 18 By 1996–1997, these tariffs had fallen to 52 percent and 22 percent, respectively. Reductions in tariffs and the removal of quantitative restrictions and other nontariff barriers help expand trade, but they cannot ensure that manufacturing facilities do not move to locations with more attractive tax regimes or seek larger markets offshore. Vietnam, for instance, offers twenty-year tax holidays to new investors. Incentives and what the Chinese have been able to accomplish constitute a major trade policy challenge, not only for India but for several other countries as well, including the United States.
India’s Recent Trade Policy.
Announcing a new Foreign Trade Policy in April 2018, Prime Minister Narendra Modi’s government said it wished to increase India’s share of global trade from 2.1 percent to 3.5 percent and double exports (to $900 billion) by 2020. 19 The policy seeks to integrate the government’s Make in India and Digital India initiatives.
Modi elaborated on his thinking and set out a clear road map at a speech in Washington in June 2018:
We will continue to strengthen the “Make in India” iniciativa. It is not intended for only manufacturing for the domestic market or import substitution. It is as much about making world-class products and services for the whole globe. That is why, for us, improvements towards free trade are important. It is very important for us that developed countries open their markets, not only to goods from countries like India but also to services. I see this as a win-win proposition for the U. S. and for India. India is the future human resource powerhouse of the world with a young hard-working population. In my vision, a partnership between American capital and innovation, and Indian human resources and entrepreneurship can be very powerful I am convinced we can strengthen both our economies through such partnership . 20.
This bold statement, especially in the wake of exports declining for seventeen consecutive months since December 2018, needs to be acted on. 21 But to do so effectively, the government will need to continually assess how these priorities (for example, the partnership between American capital and innovation and Indian resources and entrepreneurship) are playing out within evolving global trends.
Implementation of India’s major schemes—the Smart City Project, Make in India, Skill India Program, and Digital India—will require foreign direct investment and a comprehensive rebooting and rejuvenation of India’s manufacturing sector. The Modi government has made a good start. In 2018, India attracted more foreign direct investment (FDI) than China and the United States, tripling greenfield FDI, which reached an estimated $63 billion. 22 Indeed, India became the leading country in the world for greenfield FDI, overtaking the United States ($59.6 billion) and China ($56.6 billion).
Implementation of India’s major schemes . . . will require foreign direct investment and a comprehensive rebooting and rejuvenation of India’s manufacturing sector.
The Make in India initiative, however, has possibly run into international headwinds caused by recession, protectionism, and technological developments, such as automation and 3D printing. As a result, Make in India may only affect the Indian market, specifically the defense sector.
Relations With the United States.
The United States is by far India’s largest single country trading partner. Bilateral trade in goods increased from a modest $5.6 billion in 1990 to $66.9 billion in 2018. 23 The value of commercially traded services stood at about $58.8 billion in 2018. During Modi’s first ministerial visit to the United States in 2018, the two sides set a target of $500 billion a year in trade in goods and services, without setting a deadline.
Subsequently, on June 8, 2018, Modi addressed a joint session of the U. S. Congress: “Our relationship has overcome the hesitations of history,” he said, adding “in every sector of India’s march forward, I see the U. S. as an indispensable partner.” The trade and economic component of the relationship between the two countries must occupy pride of place, along with issues relating to foreign and security policy, in fashioning a meaningful bilateral strategic partnership.
The importance the two countries attach to enhancing economic and trade ties is reflected in paragraph 29 of the joint statement released after Modi’s 2018 visit to the United States:
In order to substantially increase bilateral trade, they pledged to explore new opportunities to break down barriers to the movement of goods and services, and support deeper integration into global supply chains, thereby creating jobs and generating prosperity in both economies. 24.
However, the lofty ideals and pronouncements of heads of state and governments do not by themselves translate into meaningful cooperation and bilateral engagement in the real world of trade negotiations. The strategic convergence the two countries are seeking does not percolate down to the trade segment, which, at its core, continues to be adversarial. The United States has been in the driver’s seat, pushing for aggressive trade liberalization, the opening of markets, and mega-trading blocs based on WTO plus commitments.
Regional Trade Agreements Relevant for India.
Trans-Pacific Partnership.
The TPP is a trade agreement among twelve Pacific Rim countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam). The agreement was expected to be completed in 2018; after protracted negotiations, it was signed on February 4, 2018. However, newly elected U. S. President Donald Trump, who had been critical of the TPP throughout the election period, has already abandoned the agreement. It would have come into force when all twelve signatories ratified it or, after two years have passed, when members representing 85 percent of the GDP of signatories ratified it (see table 1). Given that the United States accounts for 68 percent of the group’s total GDP, ratification will not be possible without its signature. 25.
Given that the United States gave its president “fast-track” approval—which means that Congress could reject or approve the agreement without separately considering each provision—the likelihood of a U. S. signature was low in any case. The TPP figured prominently in the U. S. presidential campaign. Democratic candidate Hillary Clinton supported TPP as secretary of state, but under pressure from her primary opponent, Bernie Sanders, a socialist from Vermont, she expressed grave reservations about the agreement and swore to protect American jobs. Republicans have traditionally advocated for free trade, including the TPP; but Trump based his campaign on hostility toward international trade agreements and partners, particularly Mexico and China. His central argument was that such agreements export American jobs, particularly manufacturing jobs. He denounced the TPP.
The same antitrade and antiglobalization rhetoric seen in the U. S. presidential campaign echoed arguments in the Brexit debate. Even if the “Remain” vote had won, half of the British electorate clearly felt alienated. The financial crisis of 2008 and its aftermath of slow growth in developed economies intensified inequities in the sharing of gains and losses, exacerbating inequality and national-level divisions between the better educated and economically well-off and the rest of the population. Both Brexit and the current U. S. stance on trade essentially reflect the inability of advanced industrial countries to cope with slow rates of economic growth.
Given that the United States has rejected the TPP, the agreement will be delayed indefinitely. After some time, however, the United States and other countries could seek to renegotiate some of its terms. The prospects for finding agreement on whether and how to accommodate new demands by the United States (and other countries) are difficult to predict.
There is more bad news for the TPP. A 2018 report by the International Trade Commission (ITC) finds that the U. S. trade deficit with FTA partners increased by $141 billion (418 percent) from 1989 to 2018. 26 The U. S. trade deficit with all non-FTA partners decreased by $46 billion (6 percent) since 2005. Coming from the ITC, which has traditionally supported FTAs, the report set off alarm bells.
Although the TPP will not be implemented in its current form, it is worth analyzing how India would fare if it would be. In a study prepared for the U. S.-India Business Council (USIBC), C. Fred Bergsten of the Peterson Institute for International Economics argued strongly in favor of India trying to negotiate its entry into the TPP:
India’s competitiveness problem is compounded by its absence from the world’s new megaregional trade agreements, especially the Trans-Pacific Partnership (TPP) but also the Transatlantic Trade and Investment Partnership (TTIP). If China and the rest of the Asia-Pacific Economic Cooperation (APEC) forum join a second stage of the TPP that continues to exclude India, India’s annual export losses will approach $50 billion. India is being left behind by the world trading system. 27.
India could enjoy export gains of more than $500 billion a year (a 60 percent increase, more than any other country) from joining an expanded TPP or participating in the comprehensive Free Trade Area of the Asia Pacific that APEC is now considering. 28 India’s national income would expand by a whopping 4 percent (more than $200 billion) as a result. 29 India could further increase its exports by participating in the major plurilateral negotiations on services, environmental goods, and government procurement now taking place at the WTO.
India could further increase its exports by participating in the major plurilateral negotiations on services, environmental goods, and government procurement now taking place at the WTO.
The intersection between trade policy and electoral politics invariably produces fault lines. Globalization and trade liberalization produce both winners and losers. Decisionmakers reach out to unconvinced sections by extolling the virtues of the proposed trade deal often by exaggerating the potential benefits.
In 1993, Gary Hufbauer and Jeffrey Schott of the Peterson Institute projected that the North American Free Trade Agreement (NAFTA) would lead to a rising U. S. trade surplus with Mexico that would create 170,000 net new jobs a year in the United States. Less than two years after NAFTA’s implementation, Hufbauer recognized that his job projections had been totally wrong, noting that “The best figure for the job effect of NAFTA is approximately zero. . . . The lesson for me is to stay away from job forecasting.” 30.
The TPP seeks to influence international trade in three ways: by reducing or eliminating tariffs on qualifying products among member countries, regulating the role of state-owned enterprises, and achieving regulatory coherence on an unprecedented scale among its members. Negotiating partners expressed an interest in comprehensively reducing barriers to trade in goods (including agricultural goods) and services, as well as rates and disciplines on a wide range of topics (including new policy issues that neither the WTO nor existing FTAs cover). All these changes would affect India’s external trade in ways that are difficult to forecast.
Some Indian commentators have argued off the record that India should aspire to join the TPP. But India was not asked to join the TPP and, even if the agreement was to move forward, would unlikely be invited in the coming years under the current circumstances. The agreement’s delay (if not death) gives India breathing space to take corrective domestic actions to manage the consequences of a revised or revived TPP and thereby increase the likelihood of joining a revised TPP at some stage. This provides a best-case scenario for India.
Asia-Pacific Economic Cooperation.
APEC is a forum for twenty-one Pacific Rim member economies that promotes free trade throughout the Asia Pacific region. India is not a member. A report by the Asia Policy Society Institute suggests why it is an ideal time for India to join APEC and illustrates the benefits of and possible obstacles to its membership. 31.
India’s membership in APEC would benefit the government’s development programs, which rely heavily on “greater access to foreign markets, investment sources, and value chains to bolster manufacturing and create jobs at home,” 32 and prepare Indian entrepreneurs and businesses for the changing global economy. An impressive growth rate, coupled with Modi’s persistent efforts at public economic diplomacy in the region and beyond, have given India “hope that it can finally succeed in attaining membership after nearly two decades of disappointment.” 33 Joining APEC could be difficult, however, given the reservations of some members who perceive India’s policies as insufficiently supportive of more open trade and greater regional integration.
India’s membership in APEC would benefit the government’s development programs.
APEC itself would also benefit from India’s participation in the forum, as its members would have better access to the country’s labor supply and investment opportunities and to a consumer market that includes a rapidly expanding middle class of 200 million people by 2020 and 475 million by 2030. 34.
Transatlantic Trade and Investment Partnership.
In terms of ambition and sheer audacity of scale, the TTIP could be ranked at the level of the proposed TPP.
The Transatlantic Trade and Investment Partnership (T-TIP) is an ambitious, comprehensive, and high-standard trade and investment agreement being negotiated between the United States and the European Union (EU). T-TIP will help unlock opportunity for American families, workers, businesses, farmers and ranchers through increased access to European markets for Made-in-America goods and services. This will help to promote U. S. international competitiveness, jobs and growth. 35.
Britain’s decision to leave the European Union effectively put the TTIP on hold in its present form. The partnership will require renegotiation. Nevertheless, it would be useful for India’s Ministry of Commerce to review the chapters on the environment, labor standards, government procurement, state-owned enterprises, and nontariff barriers to at least determine what the country is up against and so that India’s industry can be encouraged to upgrade. India has again been granted valuable breathing space, which its industrial sector should not waste.
Regional Comprehensive Economic Partnership.
Launched in Cambodia on December 20, 2018, the RCEP is an FTA between ASEAN and its FTA partners (Australia, Brunei, China, Cambodia, India, Indonesia, Japan, the Republic of Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, and Vietnam). The sixteen participating countries account for almost half the world’s population, 30 percent of global GDP, and 25 percent of world exports. 36 RCEP seeks to achieve a modern, comprehensive, high-quality, and mutually beneficial economic partnership agreement that will cover trade in goods, services, investment, economic and technical cooperation, intellectual property, competition, and dispute settlement.
India is participating in the RCEP negotiations but appears to be doing so with extreme caution. While there are perhaps valid reasons for this, India should be more forthright because of the following:
Environmental and labor standards are not big issues in this agreement. The agreement gives India an excellent opportunity to negotiate with China, which it has found difficult to do bilaterally. India would have to recalibrate its demands on the movement of professionals (Mode 4), so that its partners respond positively. India could include some common objectives on environment and nontariff barriers that would not be part of the dispute settlement but would instead be “best-endeavor” clauses.
A Road Map for India.
India and the United States were among the original signatories to the GATT in 1947. That agreement’s preamble encapsulates the rationale for trade policy, which continues to be as valid today as it was then. The first of its two paragraphs cites the goals of “raising standards of living, ensuring full employment, and steadily growing volume of real income.” 37 The second cites modalities for achieving them, including “reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international commerce.”
For most of the first thirty years of its existence, the multilateral trading system comprised a negotiated framework of rights and obligations governing trade in goods. It set border measures for both tariff and nontariff barriers. The Tokyo Round (1973–1979), the seventh round of multilateral trade negotiations, reduced tariffs and resulted in a number of stand-alone agreements on nontariff barriers. The fragmentation of the trade system dates back to this round of talks. Member countries could accede to the Tokyo Round agreements on an à la carte basis. India chose to do just that, acceding to only some of these agreements. 38.
India found comfort in MFN trade, which became an article of faith—the only exception being the Generalized System of Preferences, a scheme that extended concessions and preferences on a unilateral basis. As long as India benefitted, it liked the scheme. The minute India became subject to conditions and found itself excluded, it protested, albeit without much success.
For valid reasons, India has found it difficult to accept the inclusion of issues relating to Trade-Related Aspects of Intellectual Property Rights ( TRIPs ), the environment, labor standards, and investment and regulatory matters. India has therefore found it difficult to accede to FTAs, which are invariably designed and operated on a WTO plus basis. India’s problem today is not with TRIPs per se in the WTO, but with what is known as WTO TRIPs-plus standards. India is now fully compliant with WTO TRIPs standards.
The dilemma now is that the WTO is moribund, and developed countries are unwilling to pursue issues except on their terms. Action is therefore shifting to plurilateral agreements in the WTO and RTAs/FTAs. India is a player in neither; it is not a party to either the plurilateral Trade in Services Agreement (TiSA) or the ITA-2 being negotiated at the WTO, although its interests are at stake in both areas.
At the heart of the trade policy differences between the United States and India is intellectual property. India recognizes the need to reward creativity, innovation, and inventions and to balance that against the requirements of public good. The United States allows multinational drug companies to rake in large profits, as part of a healthcare system that is unaffordable even for the average American citizen. India, on the other hand, is the world’s leading manufacturer and supplier of generic drugs. There was therefore understandable concern when the USIBC reported in its submission to the U. S. trade representative that India had given an assurance that it would no longer resort to compulsory licensing. India flatly denied it had provided such an assurance, recalling that it had resorted to compulsory licensing only once. The USIBC’s clarification of April 14, 2018, is interesting:
USIBC recognizes and supports the Government of India’s sovereign right to issue a compulsory license (CL). However, in order to attract investments that are imperative for innovation to thrive in India, the Council and its members seek transparency, consistency and clarity in the legislation and circumstances under which such compulsory licenses can be issued so as to enable well-informed business decisions.
Innovation is the bedrock of Prime Minister Modi’s vision for Make in India, Start Up India and Digital India. USIBC and its members commend the Government of India for its openness to engage in dialogue with the industry in a manner that will grow the economy and bring superior innovation to the lives of Indians. 39.
In May 2018, the government of India released a new intellectual property rights policy. However, if innovation needs to be promoted, perhaps India should have unveiled an innovation incentivization policy, as intellectual property rights are the flip side of the innovation coin. The new policy does not seek to delineate the elements that would promote and incentivize innovation and help release the creative potential and energies of India’s youth, especially graduates of the I ndian institutes of technology and other leading educational and research institutions. It is not clear how the policy would (1) preserve and promote India’s preeminent position as the pharmacy of the world or ensure that India continues to produce drugs and pharmaceuticals of high quality at competitive prices and thus play a role in promoting the basic right to health; (2) protect the right to use the flexibilities under the TRIPs agreement, especially with regard to the issuance of compulsory licensing related to public health; or (3) protect, promote, and enhance India’s genetic resources, prevent biopiracy, and protect traditional knowledge and folklore.
If innovation needs to be promoted, perhaps India should have unveiled an innovation incentivization policy, as intellectual property rights are the flip side of the innovation coin.
A Positive Trade Policy Agenda.
There is overwhelming evidence that trade has contributed to global prosperity, raised standards of living, and contributed to steadily growing real income. 40 Globalization, however, produces both winners and losers. Trade produces prosperity but also inequality; it can have devastating effects on the manufacturing sector if it is subjected to subsidized or dumped products and exchange rate manipulation. Although the trading system provides remedies against unfair trade practices, little can be done if predatory pricing is institutionally entrenched, when entire systems do not work on the basis of market prices and it is difficult to determine where state subsidization ends and enterprise dumping begins.
Developments in global trade policy confront Indian policymakers with some hard choices. 41 An ostrich-like switch-off mode can only exacerbate the country’s problems. A good starting point would be to establish how India went so badly wrong in entering into trade agreements that are so low on ambition and counterproductive to its interests. It is axiomatic that if an FTA results in trade expansion but is in the interest of one partner, it is a badly negotiated agreement. A series of badly negotiated agreements should result in the sacking of trade negotiators, not a turn away from free trade.
India’s ill-conceived trade pacts have resulted in inverted duty structures, high import duties on raw materials and intermediates, and lower duties on finished goods that discourage the production and exports of value added items. 42 The Modi government has been bold in conceptual clarity, but it appears to be handicapped by its inward-looking bureaucracy.
There has to be inner consistency and harmony between the objectives of policy and the implementing modalities. It is not possible to want to increase the share of global trade and create millions of jobs by turning one’s back on trade policy or relying on a trade policy that isolates India from the major trading arrangements globally taking shape.
Trade and foreign policies must by and large be in sync.
Trade and foreign policies must by and large be in sync. The world of trade policy requires give and take. Negotiations for an FTA with the European Union have been languishing since 2007. The European Union is India’s largest trading partner, accounting for 13 percent of India’s total share of goods and services. A good indicator of a country’s external engagements is whether its foreign and trade policies reinforce each other. India has struggled with a foreign policy segment that seeks strategic content with its trading partners and a trade policy segment that is more circumspect and inward-looking, often for good reason.
Conceptual clarity is also required regarding actions that could broadly be categorized as trade promotion and actions that would fall under the rubric of trade policy. India’s merchandise exports have a narrow account for 78 percent of total exports, and manufacturing exports are rapidly losing competitiveness, 43 primarily because of a poor logistics infrastructure and weak trade facilitation.
India’s experiment with special economic zones (SEZs) did not take off. The establishment of free ports or other schemes need to be considered on the merits. 44 One might be forgiven for asking why free ports would succeed if SEZs failed or why the Chinese can organize themselves more effectively than other countries. Meanwhile, a key problem at hand is India’s Supreme Court notice to the center and some states on returning unused SEZ land that belonged to farmers. 45 The governments must consider whether to improve or revise the policy.
Under the rubric of trade policy come issues like the real effective exchange rate and the global trading architecture. India has not compensated for its declining exports to the European Union and the United States with increases elsewhere. Clearly, the trade policy bureaucracy has some explaining to do.
India should take advantage of delays in the TPP and TTIP to set its domestic house in order and register as a major trading nation.
India should take advantage of delays in the TPP and TTIP to set its domestic house in order and register as a major trading nation. If it does not, the prime minister’s grand plan to increase annual trade turnover with the United States to $500 billion and raise India’s share of global trade to 3.5 percent will ring hollow.
India should revive the multilateral trade negotiations at the WTO. Doing so requires farsightedness on India’s part as well as compromises in some of the positions it has taken on agriculture, Mode 4 of GATS, ITA-2, and government procurement. Its offers can be conditional, putting the onus of taking them forward on India’s major developed country partners and the concessions they are willing to grant India. At the end of the day, India’s interests are better served by the WTO and MFN trade than by the myriad RTAs and FTAs.
India does not appear to have any option other than to autonomously adjust to world standards on technical barriers to trade, sanitary/phytosanitary standards, and environmental and regulatory standards and to engage in crisis-mode upgrading of the physical infrastructure that is crucial to trade. Unless the industrial sector steps up and assumes responsibility for meeting world standards, there will be limits to what the government can do in terms of improving the country’s infrastructure.
Unless the industrial sector steps up and assumes responsibility for meeting world standards, there will be limits to what the government can do in terms of improving the country’s infrastructure.
The Trade Facilitation Agreement of the WTO—to which India is now a signatory and the cabinet has now approved—would appear to provide the guiding framework within which the required actions can be taken. India needs to work on a road map on a war footing that can bring its goods and services into conformity with the highest standards on technical barriers to trade; sanitary/phytosanitary rules; labeling, packaging, customs, clearance, and freight procedures; and the best or next-best environmental and labor regulations.
Undertaking these actions will require hard decisions, some adjustment costs, and even pain in the short and medium term. These actions are inescapable, however, if India’s manufacturing sector is to be given a fighting chance of competing in the global market place. Action is required on the part of both government and industry and related stakeholders.
Sobre o autor.
Ambassador Hardeep Singh Puri served as India’s permanent representative to the United Nations in Geneva and New York. He served as a member and chair of nine dispute settlement panels of the GATT and WTO between 1982 and 2007. Between 1988 and 1991, he was the coordinator of the Multilateral Trade Negotiations Project of the UN Development Program and UN Conference on Trade and Development, which advised developing countries in the Uruguay Round. During a career spanning thirty-nine years, he held senior positions in the Indian Ministry of External Affairs, including as secretary for economic relations, as well as important diplomatic posts in Brazil, Japan, Sri Lanka, and the United Kingdom.
2 For the population figure, see World Bank, “Population, Total,” World Development Indicators database, accessed January 2017, data. worldbank/indicator/SP. POP. TOTL; and for the economy figure, see World Bank, “India,” World Development Indicators database, accessed January 2017, worldbank/en/country/india.
3 Sabina Alkire et al., “Poverty in Rural and Urban Areas: Direct Comparisons Using the Global MPI 2018,” Oxford Poverty and Human Development Initiative, June 2018, ophi. uk/wp-content/uploads/Poverty-in-Rural-and-Urban-Areas-Direct-Comparisons-using-the-Global-MPI-2018.pdf.
10 World Bank, “Trade, Merchandise Exports (Current US$),” World Development Indicators database, accessed January 2017, data. worldbank/topic/trade? end=2018&locations=CN&start=2018.
12 “Discussion Paper: China, the Millennium Development Goals, and the Post-2018 Development Agenda,” United Nations Development Program China, February 2018, cn. undp/content/dam/china/docs/Publications/UNDP-CH_discussionpaper-MDGPost2018.pdf.
15 Biswajit Dhar, “Weaving a Success Story,” Hindustan Times , July 20, 2018.
17 D. Ravi Kanth, “What Happened at Nairobi and Why: Dismantling of Doha Development Agenda and India’s Role,” Economic and Political Weekly 51, no. 11 (March 2018): epw. in/journal/2018/11/insight/what-happened-nairobi-and-why. html.
18 Arvind Panagariya, “The WTO Trade Policy Review of India, 1998,” World Economy 22, no. 6 (August 1999): 799–824, columbia. edu/
20 “Prime Minister's Keynote Speech at 40th AGM of US India Business Council (USIBC),” press release, Press Information Bureau, Government of India, Prime Minister's Office, June 8, 2018, pib. nic. in/newsite/PrintRelease. aspx? relid=146054.
21 Since this paper was drafted, merchandise exports fell for a total of nineteen consecutive months until June 2018, when exports increased 1.3 percent; C. P. Chandrasekhar and Jayati Ghosh, “Understanding India’s Export Collapse,” Hindu Business Line , November 21, 2018, thehindubusinessline/opinion/columns/why-indias-exports-are-falling/article9370929.ece.
24 Office of the Press Secretary, “JOINT STATEMENT: The United States and India: Enduring Global Partners in the 21st Century,” press release, White House, June 7, 2018, https://whitehouse. gov/the-press-office/2018/06/07/joint-statement-united-states-and-india-enduring-global-partners-21st.
25 World Bank, “Gross Domestic Product, 2018,” World Development Indicators database, accessed February 2017, databank. worldbank/data/download/GDP. pdf.
26 “Trans-Pacific Partnership Agreement: Likely Impact on the U. S. Economy and on Specific Industry Sectors,” United States International Trade Commission, May 2018, https://usitc. gov/publications/332/pub4607.pdf; and Public Citizen, “New ITC Report Finds Disturbing Trends in U. S. Economy After Implementation of Free Trade Agreements,” June 30, 2018, citizen/documents/ITC-Report-FTAs. pdf.
27 C. Fred Bergsten, “India’s Rise: A Strategy for Trade-Led Growth,” Peterson Institute for International Economics, September 2018, https://piie/sites/default/files/publications/briefings/piieb15-4.pdf.
30 Bob Davis, "Free Trade Is Headed for More Hot Debate," Wall Street Journal , April 17, 1995, cited in Public Citizen, “NAFTA’s Broken Promises 1994-2018: Outcomes of the North American Free Trade Agreement,” 2018, citizen/documents/NAFTAs-Broken-Promises. pdf.
31 Harsha V. Singh and Anubhav Gupta, “India’s Future in Asia: The APEC Opportunity,” Asia Society Policy Institute, March 2018, asiasociety/files/ASPI_APEC_fullreport_online. pdf.
35 “Transatlantic Trade and Investment Partnership (T-TIP),” Office of the United States Trade Representative, https://ustr. gov/ttip.
38 The “codes” negotiated covered subsidies and countervailing measures, technical barriers to trade, import-licensing procedures, government procurement, customs valuation, antidumping, bovine meat, international dairy, trade in civil aircraft, and other issues.
40 “Commission Staff Working Document: Trade as a Driver of Prosperity,” European Commission, November 2018, trade. ec. europa. eu/doclib/docs/2018/november/tradoc_146940.pdf.
Comments (2)
Some significant home truths. Bridging the gap between policy objectives and implementation requires a coordinated, all-of-government approach, with a clear understanding of geopolitical realities and trade-offs required. Critically, our economic Ministries have to emerge from a blinkered approach and a silo mentality, if the government's ambitious target of doubling our exports by 2020 and expanding our share in global exports is to be achieved.
It is interesting to note that many a authors sweep India's manufacturing sector as lacking in competitiveness and productivity. Não é assim. Atleast not the part of manufacturing sector that has integrated itself with world supply chain (e. g., auto, engineering components, precision metal work, aerospace components). There are deming award winners for manufacturing quality in dozens in India. At the same time, there are parts of manufacturing sector that has never reached any potential (e. g. electronics hardware manufacturing). There are legacy reasons for the way our manufacturing sector is. To build an argument based on 80s level of competitiveness of our domestic sector doesn't take the debate far! And for a change, we need to place more efforts to build a trade related bureaucracy in economic and commerce ministries that understands the nuances of trade negotiations than the commonly found generalist 'non-negotiable' masters who come on deputation tenures and land up directly on negotiating tables. Certainly, the article addresses a lot of relevant issues that needs deeper debate.
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International trade system in india

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date: 13 January 2018.
Resumo e Palavras-chave.
Although India’s foreign trade policy has undergone drastic changes over the years, its recognition of the international trading system as the vehicle for trade negotiations has remained unwavering. As India’s economy has begun to grow due to the use of open policies, so has its influence in championing the ambitions of developing countries. India’s history tells a story of the convergence of its foreign trade policy with the underlying principles of the multilateral trading system. However, looking forward, to maximize fully the benefits to it of the international trading system, India’s attention must now turn to facilitating convergence between its domestic policy and its foreign policy. This chapter discusses India’s trajectory in the international trading system over the years and the domestic issues India must now confront in order to fully garner its benefits.
Pradeep S Mehta, a student of law, economics and political science, is the head of a 30 year old NGO: CUTS International with centres in Jaipur, Geneva, Nairobi, Lusaka, Accra and Hanoi. He has also served as adviser to the Trade & Industries Minister of India, and with two Director Generals of the WTO.
Bipul Chatterjee is Deputy Executive Director of CUTS International, a non-governmental think-tank working in India, regionally and at the international level on Trade, Regulations and Governance. He has more than 20 years of experience of working on economic and political economic aspects of trade liberalisation and economic diplomacy. He has done Masters in Economics from Delhi School of Economics.
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India: April 1998.
India's economic reforms and trade liberalization policies contributed to a dramatic increase in its economic growth in the mid-1990's. Larger flows of inward foreign investment and increased international trade helped India achieve annual average growth rates of 7 percent from 1993 to 1996.
India should keep up with its trade reforms to ensure strong economic growth.
India's economic reforms and trade liberalization policies contributed to a dramatic increase in its economic growth in the mid-1990's. Larger flows of inward foreign investment and increased international trade helped India achieve annual average growth rates of 7 percent from 1993 to 1996. Economic growth slowed, however, in 1997 and, according to a new WTO Secretariat report on India's trade policies and practices, India should continue liberalizing its trade and investment regime to ensure strong and stable economic growth.
The WTO Secretariat report and a policy statement prepared by the Government of India, will provide the basis for a review of India's trade policies and practices on 16 and 17 April, 1998. The focus of the WTO's report is on India's policy and trade measures affecting imports, exports and production. The report notes that India recognizes the need to continue economic reform, with an increased emphasis on improving its industrial infrastructure. The latter has proved to be a constraint on expanding economic activity and stimulating exports. Other measures under consideration are reductions in tariffs and non-tariff measures, reforming the subsidies structure (estimated to account for 14 per cent of GDP), and restructuring public sector enterprises.
The Indian Government initiated a major programme of economic reform and liberalization in 1991. Reforms in the manufacturing sector have been widespread, including reductions in average tariff rates, import licensing restrictions for industrial inputs and capital goods and compulsory industrial licensing; the agricultural sector and consumer goods trade have, as yet, been relatively untouched by government reform efforts. While there has been some liberalization, there has been no change in the structure of agricultural incentives and subsidies.
India's financial services are gradually being liberalized while significant headway has already been made in liberalizing telecommunications. Other services, such as shipping, roads, ports and air, are beginning to open up, but, the report states, foreign participation remains relatively low and significant administrative barriers remain. India amended its Copyright Law in 1994 to comply with its obligations under the Trade-Related Intellectual Property Rights (TRIPS) Agreement. As a developing country, India has until the year 2000 for most products, but until 2005 for some goods, to comply with the TRIPS Agreement but is currently required to provide means for receiving product patent application in certain areas. On this issue, a decision by a WTO dispute settlement panel and the Appellate Body has stated that India was in violation of its obligation.
Tariffs have been reduced from an average of 71 per cent in 1993 to a current average of 35 per cent. The report notes, however, that the tariff structure remains complex and that escalation remains high in several industries, notably paper and paper products, printing and publishing, wood and wood products, and food, beverages and tobacco. In general, bound tariffs remain substantially higher than applied rates, especially on agricultural products.
The report observes that import licensing remains India's main non-tariff barrier, although reforms to the system of restrictive import licensing have moved ahead steadily. The number of goods subject to import licensing has been gradually reduced - albeit with an emphasis on industrial and capital goods, rather than consumer products. The report notes that last year India presented a phase-out programme for the remaining restrictions to its trading partners. Agreement was reached with all major partners except the United States, with which India is currently in dispute settlement proceedings over its remaining restrictions.
The report observes that reforms in tariffs and non-tariff barriers have not been accompanied by similar reforms on export subsidies and incentives. India continues to maintain a large number of incentive programmes for exports. These include income tax exemptions, subsidized credit, export insurances and guarantees. The overall scope of such incentives has been enhanced, resulting in more explicit export-oriented policies, which have increased the possibility of resource misallocation.
The report notes that India has simplified its foreign investment regime and opened up a number of sectors to foreign direct investment. This is the case in manufacturing where foreign participation of up to 51 or 74 per cent can take place automatically in a number of sectors. Production in the food manufacturing sector has grown rapidly following increased foreign investment. In this sector, up to 50 and 100 per cent of participation is allowed automatically for foreigners and non-resident Indians. In the automobile sector, 51 per cent foreign equity participation is granted automatically and up to 100 per cent foreign equity participation is also allowed if approved by government authorities. This has triggered a high rate of foreign investment, mostly through joint ventures with Indian manufacturers. Major policy changes since 1993 have also included automatic permission for foreign equity participation of up to 50 per cent in some mining activities. This also applies to oil exploration where the government seeks to reduce its dependence on imports and now offers investors incentives such as tax holidays.
The report concludes that India's increased openness and integration with the world economy are important factors in explaining the healthy economic growth recorded in the mid-1990s. However, the recent economic slowdown demonstrates the need for continued and even accelerated reform. Greater transparency in decision-making, for example, could complement India's ongoing trade liberalization process in promoting a more efficient and productive economic structure. Such reforms, notes the report, should lower the anti-export bias that is still inherent in both the trade and industrial support structures and allow the government to lower export incentives and move towards a more outward, rather than export-oriented policy framework. Such steps would not only help to further India's integration into the world's economy but provide it with a firm basis for future sustained growth.
Notas aos Editores.
The WTO's Secretariat's report, together with a report prepared by India will be discussed by the WTO Trade Policy Review Body (TPRB) on 16 and 17 April 1998. The WTO's TPRB conducts a collective evaluation of the full range of trade policies and practices of each WTO member at regular periodic intervals and monitors significant trends and developments which may have an impact on the global trading system. The two reports, together with a report of the TPRB's discussion and of the Chairman's summing up, will be published in due course as the complete Trade Policy Review of India and will be available from the WTO Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
The reports cover the development of all aspects of India's trade policies, including domestic laws and regulations, the institutional framework, trade policies by measure and by sector. Since the WTO came into force, the "new areas" of services trade and trade-related aspects of intellectual property rights are also covered. Attached are the summary observations from the Secretariat and government reports. Full reports will be available for journalists from the WTO Secretariat on request.
Since December 1989, the following reports have been completed: Argentina (1992), Australia (1989 & 1994), Austria (1992), Bangladesh (1992), Benin (1997), Bolivia (1993), Brazil (1992 & 1996), Cameroon (1995), Canada (1990, 1992, 1994 & 1996), Chile (1991 & 1997), Colombia (1990 & 1996), Costa Rica (1995), Cфte d'Ivoire (1995), Cyprus (1997), the Czech Republic (1996), the Dominican Republic (1996), Egypt (1992), El Salvador (1996), the European Communities (1991, 1993, 1995 & 1997), Fiji (1997), Finland (1992), Ghana (1992), Hong Kong (1990 & 1994), Hungary (1991), Iceland (1994), India (1993), Indonesia (1991 and 1994), Israel (1994), Japan (1990, 1992, 1995 & 1998), Kenya (1993), Korea, Rep. of (1992 & 1996), Macau (1994), Malaysia (1993 & 1997), Mauritius (1995), Mexico (1993 & 1997), Morocco (1989 & 1996), New Zealand (1990 & 1996), Nigeria (1991), Norway (1991 & 1996), Pakistan (1995), Paraguay (1997), Peru (1994), the Philippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore (1992 & 1996), Slovak Republic (1995), South Africa (1993), Sri Lanka (1995), Sweden (1990 & 1994), Switzerland (1991 & 1996), Thailand (1991 & 1995), Tunisia (1994), Turkey (1994), the United States (1989, 1992, 1994 & 1996), Uganda (1995), Uruguay (1992), Venezuela (1996), Zambia (1996) and Zimbabwe (1994).
The Secretariat’s report: summary.
TRADE POLICY REVIEW BODY: INDIA.
Report by the Secretariat – Summary Observations.
The Indian Government initiated a major programme of economic reform and liberalization in 1991, reversing a policy direction followed for decades. Since then, successive Governments have progressively reduced tariff protection and relaxed and simplified India's restrictive import licensing regime. Internal reforms have included reduced control over locational and industrial licensing controls, in addition to some loosening of controls on administered prices in some sectors. In this process, however, the policy focus was principally on liberalization of capital goods and inputs for industry, to encourage domestic and export-oriented growth: by and large, imports of consumer goods remained regulated.
These reforms contributed to a dramatic increase in growth in the 1990s, accompanied by larger flows of inward foreign investment and increased international trade. The balance of payments situation also improved greatly. To build on this success, India has recognized the need to continue the economic reform process, with an increased emphasis now on improving infrastructure, which appears to be a major constraint on the growth of industrial activity and exports; further liberalizing trade through reductions in tariffs and non-tariff measures; reforming the subsidy structure, which is estimated to cost around 14 per cent of GDP; and restructuring public sector enterprises, which continue to be a fiscal drain. These reforms, if fully implemented, should lower the anti-export bias that is still inherent in both the trade and industrial support structures. This would also permit India to lower export incentives, thus moving towards a more outward, rather than export, oriented policy framework, further integrating India into the multilateral system and providing a firm basis for future sustained growth.
The Economic Environment.
Since its previous Review in 1993, India has continued liberalizing its economy, albeit at a somewhat slower pace. Economic reforms initiated in 1991 have produced strongly positive results, most notably annual real growth rates averaging 7 per cent between 1993/94 and 1996/97, led by strong industrial recovery. Over the same period, merchandise exports grew at an annual rate of some 20 per cent in current US dollar terms. In 1996/97, however, some economic slowdown occurred and export growth fell to 8 per cent, partly as a result of infrastructural bottlenecks and indicative of the need for continued structural reform.
In the area of trade reform, a tariff reduction programme has continued and is to progress further. Average rates have consequently declined. The number of goods subject to import licensing restrictions has been gradually reduced albeit with an emphasis on industrial and capital, rather than consumer goods until recently. The foreign investment regime has also been simplified with a number of sectors being opened up to foreign direct investment.
Further structural reform needs the support of continued macroeconomic stability. An important issue is the reduction of the public sector deficit, estimated at 8.5 per cent of GDP in 1996/97. The Central Government deficit fell to 5 per cent in 1996/97, but adjustments to reduce State deficits have not been as forthcoming and shoring up parts of the public sector, prior to planned reform and disinvestment, has been expensive. With the cost of supporting important sectors such as agriculture and related transfer programmes, it is unclear how far the public sector deficit may crowd out investment. Overall, subsidies remain a drain on Government revenue and lead to a misallocation of resources.
Trade Policy Features - Type and Incidence of Trade Measures.
Since 1993, tariff reform has brought the simple average of all rates down to 35 per cent in 1997/98, from 71 per cent in 1993/94; the process of tariff reform and reduction is ongoing. However, the structure of the tariff remains complex, with a large number of bands; in several industries, notably paper and paper products, printing and publishing, wood and wood products and food, beverages and tobacco, tariff escalation remains high.
Reforms to the system of restrictive import licensing have moved ahead steadily, but further steps remain to be taken and are encouraged. In general, products are first moved to a Special Import Licence (SIL) list, with producers being exposed to limited foreign competition, before the product is moved to the list of freely importable goods. The list of freely importable goods currently covers some 68 per cent of tariff lines: remaining restrictions cover mainly consumer goods, and India has proposed a six year phase-out programme for these restrictions. India is currently in dispute settlement proceedings with the United States regarding its remaining restrictions. Approximately 10 per cent of all tariff lines are presently subject to the SIL list, increasing SIL coverage by around one-third from 1995/96. India also continues to use state trading monopolies to retain some control over exports and imports of certain products (canalization). Since the previous Review, the product coverage of imports through such canalization has increased slightly; however, private operators can also trade in some of these canalized products and the share of such products in total imports has declined to 19 per cent, compared to 27 per cent at the turn of the decade.
The reforms in tariff and non-tariff barriers have not been accompanied by similar reforms to export subsidies and incentives. India continues to maintain a large number of incentive programmes for exports, incentives which, according to the authorities, are intended to compensate for import restrictions. These include income tax exemptions, subsidized credit, export insurance and guarantees, export promotion and marketing assistance schemes and access to some imports that are normally subject to restrictive licensing. The overall scope of such incentives has been enhanced, turning India's overall policy stance more explicitly export-oriented and increasing the possibility of resource misallocation.
Sectoral Policy Developments.
The agricultural sector has thus far remained relatively untouched by the reform programme. Nevertheless, agriculture has benefited from the price realignments resulting from manufacturing sector trade reforms. Some progress has also been made in the removal of state controls on the inter-state movement of certain grains and of administered prices; however, controls on the export and import of certain products through licensing policies remain.
During the Uruguay Round, India bound its agricultural tariffs at ceiling rates ranging from 0 to 300 per cent. In reality, applied rates for 1997/98 are considerably lower, averaging 26 per cent for the sector, with a peak of 45 per cent. This is however likely to change as India tariffies its present licensing restrictions; in this context, India is currently renegotiating its tariff bindings on some zero-or low-duty products. Progress in changing the structure of agricultural incentives and subsidies is likely to remain constrained by the Government's policy of providing support prices to farmers and ensuring low cost supplies to the population through the public distribution system.
Although tariff reforms have resulted in average duties in the food sector being halved since 1993 (currently around 29 per cent for food products and 134 per cent for beverages), industrial and import licensing restrictions continue to be maintained for a number of industries. In addition, a number of products are reserved for production by the small scale sector. Production by the food manufacturing sector has grown rapidly, especially following increased foreign investment where up to 51 and 100 per cent of participation is allowed automatically for foreigners and non-resident Indians, except for products reserved for the small scale sector.
Mining and petroleum.
Major policy changes since 1993 include automatic permission for foreign equity participation of up to 50 per cent in the mining of 13 minerals; foreign equity above this share must be approved by the Foreign Investment Promotion Board (FIPB). In an attempt to increase exploration, liberalization has also taken place in licenses granted for exploration. Trade reforms include a reduction in tariff rates to averages of around 10 per cent (from 46 per cent in 1993/94) for non-ferrous and iron ores and to 13 per cent (from 65 per cent in 1993/94) for coal.
India depends on imports of petroleum. Prices, until recently, continued to be administered although some effort has been made since 1993 to raise these prices periodically to reduce the fiscal burden of the "oil-pool". Despite this, the growing subsidy for petroleum products prompted the Government in 1997 to declare a phase out of most administered prices in the sector. The Government has recently also placed an emphasis on increased oil exploration domestically to reduce import dependence, through the New Exploration Licensing Policy which offers companies investment incentives such as tax holidays to invest in India.
Reforms have been most widespread in the manufacturing sector, including reductions in average tariff rates, import licensing restrictions, compulsory industrial licensing, and a liberalization of foreign investment policies. The sector has responded positively to the reforms, although some slowdown in growth has occurred in 1996/97 due, in part, to infrastructure constraints.
Since India's previous Review, the average tariff on imports of manufactures (ISIC3) has been lowered from 73 to around 36 per cent in 1997/98. Despite this, tariff escalation in some areas remains high, since the largest reductions in tariff rates have taken place for capital goods and intermediate inputs. Tariff escalation is important in sectors such as paper and paper products and to some extent in textiles and clothing, where India has traditionally maintained, and still has, high levels of protection. In certain sectors, such as automobiles, tariff reform has had little impact on imports of fully assembled items, because the liberalization of foreign direct investment without accompanying reform of import licensing restrictions has promoted local investment in manufacturing. Approximately 1,977 tariff lines, at the HS eight-digit level, in the manufacturing and mining sectors, continue to be subject to import licensing restrictions. As noted, the authorities have proposed a phase out of these restrictions over a six year period.
Foreign investment has also been considerably simplified, with an enlarged list of industries, including the automobile sector, where foreign equity participation of up to 51 or 74 per cent can take place automatically. Compulsory industrial licensing is now limited to nine industries, compared to 18 during India's previous Review; some reduction in the list of items reserved for production by the small-scale sector has also occurred.
Services contribute more than 40 per cent to India's GDP. Their overall growth has been underpinned by rapid expansion of activities in the area of finance, and, to a lesser extent, commerce and tourism.
Significant headway has been made in liberalizing telecommunications. While the government-controlled corporation VSNL operates as the exclusive provider of international long-distance services and the monopoly Department of Telecommunications for the domestic long-distance services, private investors in joint ventures are allowed to provide intra-voice telephone services in various States and metro areas. Many value added services - including voice mail, radio paging and cellular mobile telephone - are now open to 49 per cent foreign equity participation. In the area of financial services, the banking sector remains fairly closed to foreign participation, while the insurance sector is still monopolized by the Government. Under the Financial Services Agreement, the Government has offered to remove reciprocity requirements in the banking sector and also raised the annual limit on new banking licenses from eight to 12. Other services areas - such as shipping, roads, ports and air - are beginning to open up, but foreign participation remains relatively low and significant administrative barriers remain.
India in the Multilateral Trading System.
India was, from the start, an active member of the GATT and a founding member of the WTO. As a result of the Uruguay Round, India bound 67 per cent of its tariff lines; lines remaining unbound include those on certain industrial items and many consumer products. Under the General Agreement on Trade in Services (GATS), India has made commitments in 33 activities (compared with an average of 23 for developing countries) out of a total of 161. In addition, India also took part in the Information Technology Agreement - covering computers, telecommunication equipment, semiconductors, semiconductor manufacturing equipment, software, and scientific instruments. India's anti-dumping and countervailing legislations have been amended in line with relevant WTO Agreements. With respect to intellectual property rights, India's Copyright Law was amended in 1994 in accordance with its obligations under the TRIPS Agreement. India plans to make use of the transition period available to developing member countries of the WTO to implement other changes to its intellectual property rights; however, in a dispute with the United States over "pipeline" patent protection and exclusive marketing rights, the WTO's Dispute Settlement Body has found that India is obliged to implement the necessary measures. India is currently in two WTO disputes: one as a defendant with the United States, as noted above, and the other as a complainant with Hungary, relating to restrictions on textiles and clothing.
In terms of WTO tariff commitments, India has bound 67 per cent of its tariffs in manufacturing and 100 per cent in agriculture in consequence of its Uruguay Round commitments; however, most of these bindings are at ceiling levels, ranging up to 300 per cent in agriculture. The bound simple average tariff to be implemented by the year 2005 is 54 per cent, compared with the present applied rate of 35 per cent, itself set to decline further. In the services area, the initial commitments made under GATS are such that the existing policy framework is either more liberal, or equivalent to the bound measures. In both areas, thus, India, like most other developing countries, has put a ceiling on its protective structure, rather than binding it at effective levels, while pursuing unilateral liberalization.
India maintains several plurilateral agreements with countries in the region: the Bangkok Agreement, the South Asian Preferential Trading Agreement (SAPTA), and the Global System of Trade Preferences (GSTP). Further concessions to some of these countries are also provided within the framework of bilateral trade agreements. However, the impact of these agreements on India's trade seems to have been minimal. India' merchandise imports resulting from the eighth Bangkok Agreement and SAPTA member countries accounted for only 3 per cent of total merchandise imports and about 7 per cent of its merchandise exports in 1995/96.
India's increased openness and integration with the world economy have been important factors in explaining the healthy economic growth recorded in the 1990s. The recent economic slowdown demonstrates the need for continued and even accelerated reform. Transparency in decision-making, especially with regard to foreign investment, should also be increased if India is to reach its foreign investment targets. Continued opening of the trade regime and liberalization of the foreign investment regime are likely to be translated into even higher growth rates than have been experienced so far.
Other factors constraining economic growth may include the fiscal deficit, which may, for example, contribute to high interest rates. There is also concern with regard to the large share of subsidies in government expenditures: while many of these are aimed at assisting the very poor, it is not clear that this target is being reached. Second, the poor quality and coverage of certain infrastructure facilities - notably power and transportation services - which are all essential for the development of both domestic and export markets, needs to be addressed. Third, reform efforts in industrial restructuring, need to be accelerated, especially to enable the closure of unviable units in order to release resources for use in more productive areas. Internal deregulation could therefore complement India's ongoing trade liberalization process in promoting a more efficient and productive economic structure.
Government report.
TRADE POLICY REVIEW BODY: INDIA.
Report by the Government.
India has taken important policy initiatives since July 1991 to emerge as a significant player in an increasingly inter-dependent world economy. The policy reforms provided a free and conducive environment for trade and include various measures which helped to achieve the high export growth rates in some recent years. The Eighth Plan recognized that for India it was not a choice between market mechanism and planning, but that the challenge was to effectively dovetail the two, so that they are complementary to each other. The Government introduced major reforms to provide greater competitive stimulus to Indian trade and industry. India's active participation in the WTO continued and the general direction of her trade and investment reforms initiated in 1991 and highlighted in the last Trade Policy Review in December 1993, have been maintained by successive governments.
The following presentation is divided into four sections. The first deals with liberalization of trade and other economic reforms, which are mutually supportive. The second deals with India's inter-action with the WTO. The third focuses on Regional Trade Arrangements. The final section contains conclusions.
Key developments in trade and economic policy since the last review.
Objectives of Trade Policy.
In 1991, India initiated a wide-ranging programme of trade liberalization and economic deregulation, with the objective of integrating the Indian economy more closely with the world economy. The principal objective of India's trade policy defined in the Export-Import Policy for 1997 to 2002 are:
(i) to accelerate the country's transition to a globally-oriented, vibrant economy, with a view to deriving maximum benefits from expanding global market opportunities;
(ii) to stimulate sustained economic growth by providing access to essential raw materials, intermediates, components, consumer goods and capital goods required for augmenting production;
(iii) to enhance the technological strength and efficiency of Indian agriculture, industry and services thereby improving their competitive strength, while generating new employment opportunities, and to encourage the attainment of internationally accepted standards of quality;
(iv) to provide consumers with good quality products at reasonable prices.
Moreover, the Eight Five Year Plan (1992-97), called for the movement of India's trade policy regime "towards greater openness and to reap the full benefits of international trade". This has been sought to be achieved through (i) a reduction of the "negative" list of imports and exports, (ii) a gradual reduction in the level of tariff rates, and (iii) other trade policy reforms.
Significant Trade Policy Reforms.
With increased liberalization and globalization of trade, India's focus is on areas of her strength and advantage to meet global competition, as also areas having trade potential.
This is the rationale which has given the impetus for shortening of the Negative List of Imports considerably and for expanding the freely importable list. Currently, approximately 6,647 items are freely importable; 58 items are prohibited, 168 items are canalized, and as notified by India to the WTO (Notification No. WT/BOP/N/24, dated 22 May 1997) certain products included in 2,714 tariff lines at the eight-digit level of the Indian tariff classification are restricted for balance-of-payments reasons as per Article XVIII:B of GATT, and certain products included in some 600 tariff lines are restricted under Articles XX and/or XXI of GATT, the two categories being non-additive. Compared to 1.4.96, when the percentage of restricted items came to 37%, the figure for 1.4.1997 is only 32%. There is a decrease of 5% in the restricted items, whereas there is increase of 488 items in the free list. Out of the restricted items, 1,051 are importable against Special Import Licences (SILs), which are freely tradeable and transferable. Among the items importable under freely transferables SILs are a number of consumer durables. An agreement on time schedules for removal of quantitative restrictions (QRs) maintained for balance-of-payment reasons has been reached by India with its major trading partners other than the United States.
Many of the canalized items (equivalent to 47 items out of 176 in total) are also under the SIL regime, and imports of canalized items have fallen from 27% of merchandise imports in 1988-89 to 19% in 1996-97, with all canalizing agencies amongst the PSUs being required to follow commercial principles in carrying out their operations.
Several stages of reforms have lifted all licensing restrictions on imports of capital goods, liberalized partially imports of consumer goods and reduced maximum tariffs from over 300% to 45% (including a surcharge of 5%). Collection rates, which are a better indicator of protection than declared rates, came down from the level of 47% in 1990-91 to 29% in 1995-96.
Exchange Market Reforms.
The Eight Plan had envisaged exchange rate reforms as part of the general trade policy reforms, and in March 1993 the exchange rates were unified and transactions on the trade account were freed from foreign exchange control. Further measures taken to simplify procedures related to the purchase of foreign exchange so as to enhance current account convertibility. These included permission to Exchange Earner's Foreign Currency (EEFC) account holders to use these funds for business-related current account transactions. Authorized dealers were allowed to export surplus currency to private money changers abroad, in addition to their own branches and correspondents. They were empowered to allow Indian resident families to remit US$5,000 per year to close relatives abroad, without reference to the RBI. Monetary ceilings on remittances for a wide range of purposes were also removed.
Reforms in the Foreign Investment Regime.
Since export growth depends on the existence of a strong production base in thrust sectors, which could expand to meet further growth needs, the stimulus in such thrust areas has been provided by streamlining the procedures for foreign investment. The Foreign Investment Promotion Board (FIPB) has been revamped to make the rules and regulations pertaining to foreign investment more transparent. The first-ever guidelines for approving FDI by the FIPB have been announced to expedite approval of foreign investment in areas not covered under automatic approval. Priority areas for allowing 100% foreign equity have been spelt out. An expanded list of 46 industries eligible for automatic approval up to 51% foreign equity, three industries relating to mining activity eligible for automatic approval up to 50% foreign equity and another set of nine industries eligible for 74% foreign equity have been announced by the Government. The limit on holdings by individual foreign institutional investors (FIIs) in a company has been raised from 5% to 10% of the company's shares, while the aggregate limit has been increased from 24% to 30%. FIIs have also recently been allowed to invest in non-listed companies. It is no longer necessary for automatic approvals by the Reserve Bank of India (RBI) that the amount of foreign equity should cover the foreign exchange requirements for import of capital goods needed for the project. To impart flexibility in sourcing of technology imports, technology transfer has been delinked from equity investment.
Reforms in the Infrastructure Sector.
Removing infrastructural bottlenecks has been another key component of the trade reforms package. In the telecommunications sector, significant progress has been made in involving the private sector in value-added services, such as cellular, mobile and paging services. A Telecom Regulatory Authority was established in March 1997, which will separate the regulatory functions from policy formulation and operational functions. New guidelines allow private participation in ports, investments being on B. O.T. basis, and already approval for a private container terminal valued at Rs 70 billion has been awarded. Similarly, fresh guidelines for private investment in the highway sector have been announced, procedures have been simplified and environmental clearance and equity participation made easier. Approval has been given for a rail-based mass rapid transit system (MRTS) in Delhi, and the cities of Bangalore, Hyderabad, Mumbai and Calcutta have proposed major improvements in their public transport system through the introduction/augmentation of rail-based transit systems. A new policy for private investment in civil aviation has been announced, and this includes allowing 40% equity in domestic airlines.
Domestic Tax Reforms.
Several new measures for streamlining and rationalizing the tax structure have been initiated. The MODVAT scheme has been extended to the textile sector by rationalization of rate structure to modernize and revive the textile industry. The direct tax regime has been strengthened by measures like moving towards a "presumptive" tax system, greater reliance on "pay as you earn" and self assessment schemes, restricting "scrutiny assessment" to a limited number of cases, broadening of the tax base through the "four economic criteria" scheme and the introduction of the Minimum Alternate Tax (MAT) for the corporate sector (with the exception of companies engaged in power and infrastructure sectors) and measures such as progressive computerization. The rates of corporate tax have also been progressively reduced to 35% for assessment year 1998-99 and the corporate surcharge has been eliminated.
Other Key Economic Reforms.
Other than the reforms directly connected with the trade regime, an array of reforms to make the economy more competitive, and thereby, indirectly, provide a greater impetus to trade, both domestic and international, have been introduced.
Through the New Industrial Policy of 1991, the total number of industries reserved for public sector enterprises was reduced to eight, and since then two more industries in the mining sector have been further de-reserved. With delicensing of consumer electronics, at present only 14 industries remain under the purview of industrial licensing. Guidelines for Euro Issues and External Commercial Borrowing (ECB) have been liberalized to ease the access of Indian companies to international capital markets. Some deregulation of administered prices have taken place with the deregulation, in February 1997, of the prices and distribution of certain grades of coal and by the decision of the Government on 1.9.1997 to dismantle the Administered Pricing Mechanism in the petroleum sector by introducing reforms in a phased manner, whereby consumer prices of major petroleum products will be moved towards import parity.
Decontrol of the banking system is continuing. There has been deregulation of interest rates on term deposits of over one year, and on non-resident external rupee deposits above two years. Selective credit controls on a number of commodities were eliminated from October 1996. Competition in the banking sector has increased gradually as ten new private sector banks, out of the 13 "in principle" approvals given so far, have started functioning. The RBI has issued guidelines for the setting up of new local area private banks. Two such banks have already been given "in principle" approval. Banks were allowed to fix their own foreign exchange aggregate gap limits, starting April 1996. From October 1996, banks were permitted to provide foreign currency denominated loans based on their FCNR accounts, to be used to meet either foreign currency or rupee requirements. The Incremental Cash Reserve Ratio of 10% for banks has been removed and the Statutory Liquidity Ratio on incremental net domestic demand and time liability reduced substantially. The replacement of the system of issue of ad hoc Treasury Bills by the RBI to meet temporary mismatches in Government receipts and expenditure with a system of Ways and Means advances has been put in place to act as an effective ceiling on the automatic monetization of the fiscal deficit and create a favourable macroeconomic condition for setting a "monetary target". An Insurance Regulation Authority has been established.
Significant capital market reforms introduced and encompassed primary and secondary markets, equity and debt, and foreign institutional investment. Among the reforms undertaken to impart greater flexibility were the Capital Depositary's Act 1996 to facilitate dematerialization of securities; formulation of SEBI regulations, 1996 which allow the Securities and Exchange Board of India (SEBI) to regulate establishment and functioning of depositories; giving up vetting of public issue offer documents by SEBI; FIIs permitted to set up pure (100%) debt funds, and make investments in Government securities; modification of eligibility criteria for registration as an FII to allow endowment funds, university funds, foundations and charitable trusts to register; issuance of SEBI regulation on Venture Capital Fund (VCFs), allowing them to invest in unlisted companies etc. so as to provide flexibility to VCFs to provide high-risk finance; introduction of a modified take-over code; and the decision to constitute an Independent Tariff Commission.
India is of the view that not all areas of economic activity can be made a subset of trade concerns for consideration in the WTO, since many of these areas have a development perspective. However, insofar as the ongoing reforms have proved conducive to trade, they have been touched on in this presentation.
Recent Trade Facilitation Measures.
Since the last Review in 1993, the green channel facility for customs clearance has been enhanced. Large established exporters receive expeditious assessment of their imports Bills of Entry by a group of Appraisers and Assistant Collectors especially earmarked for this purpose. They are also provided facilities for de-stuffing containers at their factory premises by the Central Excise Officers, after the containers are moved straight from the port to the factory. On-line assessment and clearance through Electronic Data Interchange (EDI) has started at Delhi and is likely to be extended to all other Customs Stations by the end of 1998. An importer can file documents 30 days in advance of the expected date of arrival of a vessel, which facilitates customs clearance. Exports of perishable goods have been exempted from routine customs examination. A large number of ICDs/Container Freight Stations have been started in the hinterland areas to facilitate imports and clearing cargo at production/consumption sites.
Further, import of cargo by courier has been provided and the Multimodal Transport Act has been enacted with the objective of expeditious movement of cargo.
Harmonization of Indian standards with international standards, which is progressing rapidly under the activities of BIS, etc., are also adding to the quality/sanitary aspects of Indian products and therefore to their competitiveness.
Key economic parameters: results of the reform process.
The initial spurt of reforms from 1990-91 to 1993-94 was successful, by all accounts, resulting in a jump in economic growth to 7.2% in 1994-95 (in terms of GDP at factor cost). GDP grew by 7.1% in 1995-96 and at 6.8% during 1996-97. The average growth rate during the latest three years at 7% probably places India among the top ten performers in the world during this period. Foreign currency assets grew by 16.4% during 1996-97.
The average annual growth of exports during 1993-94 to 1995-96 was buoyant, amounting to 20% in US$ terms. Consequently, India's share in world exports increased from 0.41% in 1992-93 to 0.6% in 1995-96. The growth rate of imports also increased, from a rate of 15.3% in 1993-94 to 36.4 in 1995-96. However, a slow-down occurred in 1996-97, with exports registering a growth of only 4% and imports a growth rate of 6% with an increase in the trade deficit to $5.4 billion in 1996-97 as compared to $4.5 billion in 1995-96.
Impediments to growth of india's international trade.
India's share of world exports had declined from 2.53% at the time of independence (1947) to only 0.4% in 1980, but the reforms instituted led to some growth, with India's share in trade reaching 0.64% in 1995. However, the deceleration of the growth rate of exports from 20% in the initial years of the reforms to just 4.01% during 1996-97, and the slow down in the growth rate of imports, has caused concern. While the slow down is partly related to a general slow-down in the growth of world merchandise trade from an annual increase of 19% in 1995 to 4% in 1996, it is also, to a degree, due to denial of meaningful market access to Indian goods, and to non-tariff barriers, including anti-dumping activity, by developed countries.
This is attributable to the fact that although multilateral negotiations conducted under the aegis of GATT have greatly helped in bringing down tariffs all over the world, similar success has not, however, been achieved on non-tariff barriers affecting world trade. Although quantitative restrictions are not overtly being used by most of the countries to restrict the flow of trade, quotas, standards, subsidies and indiscriminate use of anti-dumping/countervailing duty investigations are some of the most important NTBs being used to restrict the flow of trade from countries such as India.
An analysis of India's external trade reveals that the 16 countries/territories to whom four-fifths of our exports are directed, maintain eight major categories of non-tariff barriers restricting our market access. These are (i) restrictive import policy regimes (import charges other than customs tariff, quantitative restrictions, import licensing, customs barriers); (ii) standards, testing, labelling and certification (including phytosanitary standards) which are set at unrealistic levels for developing countries or are scientifically unjustified; (iii) export subsidies (including agricultural export subsidies, preferential export financing terms, etc.); (iv) barriers on services (visible and invisible barriers restricting movement of service providers, etc.); (v) lack of intellectual property protection; (vi) government procurement regimes; (vii) barriers to investment; (viii) other barriers (including anti-dumping and countervailing measures).
Amongst the import policy issues, quantitative restrictions, especially in the textiles area, are one of the most important of the non-tariff barriers affecting India's trade. While the MFA is being phased out, there is a certain "back loading" insofar as items of interest to India are concerned. Another problem in the area of textiles arose with the introduction of new "country of origin rules" by some of our major trading partners, limiting the flexibility of Indian exporters in finishing garment/textile items from other countries for export to the trading partners, which have invoked such rules. Numerous restrictions on sanitary and phytosanitary grounds on India's agricultural products are often not supported by adequate scientific justification. Even the so-called environmental bans, as, for example, on Indian marine products harvested without certain environmental protection devices insisted on by certain trading partners, do not appear to be substantiated by sufficient scientific evidence. The restrictive visa regime in several developed countries has proved to be a disincentive for exports in the services sector by our skilled professionals, especially in the software sector. Repeated anti-dumping investigations on the same items, without regard to the special dispensation enshrined in Article 15 of the Agreement on Anti-dumping, have proved to be extremely disruptive to our external commerce.
Most of these problems are being vigorously addressed in the appropriate fora, including the Dispute Settlement Body. However, it is our perception that the time has come when nations would suo motu realise that in an interdependent world, there is no room for unjustified trade confrontations. Non-tariff barriers, especially levy of anti-dumping duties and repeated investigations on the same issues give rise to a feeling that we should, in turn, retaliate by denying market access to outsiders. A slow-down in exports, with consequent widening of the trade gap, will definitely militate against our efforts to bring down tariffs. Export growth, especially for reduction of the trade deficit, is very necessary if India is to progress with further trade and economic liberalization. This calls for better and greater market access by India's trading partners.
India and the wto.
India's role in the WTO.
India is a founding member of the GATT (1947), it actively participated in the Uruguay Round Negotiations, and is a founding member of the WTO. India strongly favours the multilateral approach to trade relations and grants MFN treatment to all its trading partners, including some who are not members of WTO. India participated actively in the last Ministerial Conference held in Singapore. Within the WTO, India is committed to ensuring that the sectors in which the developing countries enjoy a comparative advantage are adequately opened up to international trade, and also that the Special and Differential Treatment Provisions for developing countries under the different WTO Agreements are translated into specific enforceable dispensations, in order that developing countries are facilitated in their developmental efforts. India feels that the multilateral system would itself gain if it adequately reflected these concerns of the developing countries, so as to create the necessary impetus to enable developing country members to catch up with their developed country counterparts.
India's WTO Commitment.
Under the Uruguay Round India has bound 67% of all its tariff lines, whereas prior to that only 6% of tariff lines were bound. The bindings range from 0 to 300% for agricultural products from 0 to 40% for other products. Under the Uruguay Round manufactured products were bound at 25% on intermediate goods and 40% on finished goods.
The phased reduction to these bound levels from the very high level prevailing in 1990, is where necessary, in instalments over the period March 1995 to the year 2005. In textiles, where reductions will be achieved over ten years, India has reserved the right to duty levels prevailing in 1990, if the integration process envisaged under the Agreement on Textile and Clothing does not materialize in full or is delayed. Finally, in agriculture, where, except for a few goods, India's bound rates range from 100 to 300%, India is in the process of renegotiating some of its tariff bindings. Many applied tariffs are below the Uruguay Round levels.
Balance of Payments.
Under the exceptional provision of Article XVIII:B of GATT, India has some residual quantitative restrictions on imports maintained for balance-of-payments purpose. These aggregate to 2,714 tariff lines at the eight-digit level of the Indian Trade Classification. In May 1997, India presented to the WTO a plan for the elimination of these restrictions in imports, including those on consumer goods. This plan was considered at the consultations with India of the WTO Committee on Balance-of-Payments Restrictions in June-July 1997, when noting the divergence of opinion among WTO Members on, inter alia , the length of the plan, it was agreed to conclude the consultations. However, pursuant to consultations under Article XXII of the GATT 1994, a bilateral mutually agreed solution has been reached with Australia, Canada, the European Communities, New Zealand and Switzerland, as well as with Japan (which had third-party interest in these disputes).
At the request of the United States, a panel was constituted on 18 November 1997 to examine the US allegation that the continued maintenance of quantitative restrictions on imports by India is inconsistent with India's obligations under the WTO Agreement.
Simplification of customs procedures.
The Customs Valuation Rules, 1988, India's legislation on Customs Valuation, has been amended to bring it into conformity with provisions of the WTO Agreement on Implementation of Article VII of GATT 1994, the Customs Valuation Agreement.
Steps for international standards in trade and industry.
India is a signatory to the Agreement on Technical Barriers to Trade and that on Sanitary and Phytosanitary measures and there is greater emphasis on bringing Indian standards to international levels. Most standards in India are voluntary although health and safety regulations are mandatory for several products.
The Bureau of India Standards (BIS) responsible for formulating and setting national standards, has been harmonizing Indian standards with international standards for the last decade. So far nearly 3,500 Indian standards have been harmonized with ISOTEC and EC standards/regulations.
Although BIS is the national standards body of India, standards and certification schemes are also operated and enforced in certain specified sectors by other bodies. Thus for example, sanitary and phytosanitary measures are regulated by Director of Marketing and Inspection, Ministry of Agriculture, and quality and hygiene of processed foods are dealt with by the Ministries of Health and Food Processing.
India is concerned that although the BIS and the expert bodies in the field of sanitary standards participate in the policy making committees of international bodies such as the ISO, the Codex Alimentarius etc. the developing countries are grossly outnumbered in these deliberations, at times resulting in standards development not conducive to their implementation. There is a strong sentiment in India that in view of our lack of access to technologies developed abroad for achieving standards acceptable to importing countries, specific measures need to be taken by developed country Members to give effect to the clauses extending "Special and Differential treatment" to India as a developing country in the implementation of these WTO Agreements.
The only commitment India has undertaken under the Agreement is to bind its agricultural tariffs. This commitment has been fulfilled by India binding its tariffs for primary agricultural products at 100%, processed food products at 150% and edible oils at 300%. India's prevailing agricultural tariffs are well within the bound rates. Under the Uruguay Round, whenever we have bound tariffs on agricultural commodities at zero or very low-levels, renegotiation of tariff bindings have been sought under Article XXVIII of GATT. The phased reductions of quantitative restrictions would also cover certain agricultural products.
The Agreement on Agriculture was designed to improve world trade, raise prices of agricultural products and ensure higher standards of living for farmers. The retention of domestic subsidies at a high rate by many developed countries continues to give us cause for concern. In our view, the clamour for greater market access for agricultural products would carry more conviction if a definite effort is also made to force the pace in respect of bringing down such subsidies.
As per the obligations under the Agreement on Textile and Clothing (ATC) to integrate this sector into GATT 1994 in stages, the Indian Government moved cotton and wool yarn, polyester staple fibre and 20 other industrial fabrics on to the list of freely importable goods in 1995. For implementation of the second stage of integration, with effect from 1.1.98, a second tranche of textile products, mainly fabrics, was placed on the "free" list. India is concerned about the fact that repeated anti-dumping investigation by certain trading partners on the same product lines, without giving full effect to the special dispensation provisions of Article 15 of the Anti-dumping Agreement has resulted in trade harassment for its exporters of textiles.
India is availing itself of the transition periods due to her under Article 65 of the TRIPS Agreement to meet her obligations under the seven areas covered by the Agreement.
India's achievements in this field have been in the passing of TRIPS plus legislation in the field of Copyright Law. The 1994 amendments to the Act of 1957 provides protection to all original literary, dramatic, musical and artistic works, cinematographic films and sound recordings. The most recent changes bring sectors such as satellite broadcasting, computer software and digital technology under Indian copyright protection.
Trade related investment measures.
Substantial modifications have already been made to the foreign investment regime, increasing the number of sector where foreign investment can take place and also increasing the foreign equity limit on these investments. India has already notified the trade-related investment measures maintained by it in terms of Articles 2 and 5 of the TRIMs Agreement and the illustrative list annexed to the TRIMs Agreement. India has time up to 1.1.2000 to eliminate these TRIMs. TRIMs which have already been removed include dividend-balancing requirements and mixing requirements in respect of newsprint.
Anti-dumping and safeguards.
Anti-dumping and countervailing duties are imposed under the Customs Tariff Act 1975 and the Rules made thereunder. The Act and Rules are on the lines of the respective GATT Agreement on anti-dumping and countervailing duties. The time limits and the procedures prescribed under the Indian laws/GATT Agreement are strictly followed by the designated authority. With the increasing number of cases, the Government of India proposes to set up a Directorate General of Anti-dumping and Allied Duties for expeditious disposal of anti-dumping and countervailing duty cases.
Section 8 (B) of the Customs Tariff Act, 1975, was introduced recently to make provisions for imposition of safeguard duties as per the provisions of the WTO Agreement on Safeguards. The Act provides for imposition of safeguard duties on products being imported in increased quantities such as to cause or threaten to cause serious injury to the domestic industry that produces directly or indirectly a competitive product. The Director General of Safeguards has been appointed to consider complaints received from domestic industry suffering injury from the increased imports, for imposition of safeguard duties.
The services sector accounts for about 40% of India's GDP, 25% of employment and 30% of export earnings. Recognizing the importance of the services sector in achieving higher economic growth, the government is giving added emphasis to improving services such as telecommunications, shipping, roads, ports and air transport. The foreign direct investment regime has been liberalized to attract foreign investment in the services sector. However, a path of gradual liberalization has been adopted so as to have wider acceptability of the reform process. India actively participated in the Uruguay Round services negotiations and made commitments in 33 activities as compared to an average of 23 for developing countries. India also participated in the spill-over negotiations. In basic telecommunication services, India has undertaken commitments in the areas of voice telephone service for local and long-distance (within the service area), cellular mobile services and other services such as circuit switched data transmission sources, facsimile services, private leased circuit services as per details given in the schedule of commitments. India also participated in the recently concluded financial services negotiations and improved its offer by enhancing the annual limit for foreign bank branches from 8 to 12 and withdrawing India's MFN exemptions relating to banking services.
While developed countries have surplus capital to invest, most of the developing countries have surplus of skilled, semi-skilled and unskilled workers. We have a large pool of well-qualified professionals capable of providing services abroad. As developed countries have a comparative advantage in exporting capital intensive services, similarly developing countries have a comparative advantage in exporting labour intensive services involving movement of persons. While GATS recognizes "movement of natural persons" as one of the modes for supply of services, the commitments undertaken by the developed countries have very little to offer to the developing countries in terms of opening their markets or facilitating the administrative arrangements or providing national treatment in the area of movement of natural persons. The present commitments are largely restricted to business visitors and intra-corporate transferees. There are very limited commitments for qualified specialist personnel and even where commitments are made for qualified specialist professionals, they cannot move in an individual capacity but should be an employee for a specified duration of the juridical person supplying the services.
In Article IV of GATS, there is a clear obligation to increase the participation of developing countries in trade in services. The Agreement also recognizes the basic asymmetry in the level of development of the services sector in developed and developing countries and a commitment that the developed countries will take concrete measures aimed at strengthening the domestic service sector of developing countries and providing effective market access in sectors and modes of supply of export interest to developing countries. However, the GATS objectives of increased participation of developing countries in trade in services has hardly been addressed. Therefore, in order to achieve required balance in GATS and increase the participation of developing countries in trade in services as per Article IV of GATS, the developed countries should undertake a higher level of commitments on movements of natural persons mode and other areas of export interest to the developing countries.
India is not a member of the Plurilateral Agreement on Government Procurement. However, we are taking part in the discussions in the Working Group on Transparency in Government Procurement set up as per the mandate of the Singapore Ministerial Conference of the WTO.
With the rapid increase in the international trade and consequent increase in cross-border movement of products, the linkage between trade and environment has become a relevant issue for the international community. GATT/WTO being the chief trade body addressing international trade issues has taken cognizance of it. Already certain Agreements within WTO, such as the Agreement on Technical Barriers to Trade, and the Agreement on Sanitary and Phytosanitary measures have addressed environmental issues to some extent.
India's approach on the issue of the relationship between trade and environment has been:
- work already accomplished in the GATT must provide the starting point;
- international rules should not create unnecessary or unjustifiable obstacles to international trade;
- there has to be a clear recognition that environmental standards differ from country to country and that the solution lies in mutual recognition of product-related standards rather than harmonization and, lastly;
- where proprietary substances or processes are mandated for use by international or national laws for environmental purposes, owners of intellectual property should be obliged to sell technologies or products at fair and most favourable terms and conditions.
Information technology (IT)
During the Singapore Ministerial Conference a Ministerial Declaration on Trade in Information Technology Products was adopted. This Declaration aims to expand world trade in information technology products. India participated in the negotiations on the Agreement from the early stages and after examination of the implications of the proposed agreement and extensive discussions with trading partners joined as a participant on 1 April 1997. India is committed to phasing out the import tariffs on the products covered by the ITA as scheduled. The quantitative restrictions imposed on these products for BOP reasons would also be phased out by 31 March 2000.
At the same time, India has also raised the issue during plurilateral discussion that if the global information technology infrastructure is to be strengthened, the rules for movement of skilled persons working in this sector should also be liberalized.
Trade and Investment and Competition Policy.
India has been actively participating in the educative process in the Working Groups in the WTO. India's standpoint in this educative process is that the development dimension should be fully integrated into the process.
Regional trade arrangements.
India attaches significance to her participation in regional agreements within the framework of multilateral rules. India has been instrumental in setting up the South Asian Association for Regional Cooperation (SAARC), whose major achievement in 1995 was the conclusion of the negotiations on trade preferences within the framework of the SAARC Preferential Trading Arrangement (SAPTA). SAPTA became operational on 7 December 1995 and includes preferential tariff concessions on 226 items and product groups. A second round of SAPTA trade negotiations was launched in January 1996 to broaden tariff concessions. India granted concessions on 902 tariff lines, effective 1 March 1997. The third round of trade negotiations commenced in July 1997. The goal is to continue the SAPTA process with the ultimate aim of having a South Asian Free Trade Area (SAFTA) not later than the year 2001. India is a member of the Bangkok Agreement, originally signed in 1975, and which now also includes Bangladesh, the Republic of Korea, the Lao People's Democratic Republic, Papua New Guinea and Sri Lanka. The Agreement provides for the liberalization of tariff and non-tariff barriers between its members.
The Indian Ocean Rim Association for Regional Cooperation was recently formed along with 13 other countries in the region. The Charter of the Association was adopted in March 1997. Economic cooperation is expected to take place in trade facilitation, promotion and liberalization, promotion of foreign investment, promotion of scientific and technological cooperation, tourism, the movement of natural persons and service providers, and the development of infrastructure and human resources. An enabling clause to identify other areas of cooperation is also included in the agreement. India has also signed sub-regional agreements with Nepal, Bangladesh, Myanmar and Bhutan and more recently with Bangladesh, Sri Lanka and Thailand. Details of the agreement known as BISTEC are presently being formulated.
India has signed bilateral agreements with two neighbouring countries, Bhutan and Nepal, to provide them with preferential access. More limited agreements have been signed with Bangladesh, which receives the preferential treatment India accords to least developed countries under SAPTA, and with Myanmar. Commonwealth preferences continue to be extended to Mauritius, Tonga and the Seychelles.
India, with its per capita GNP of barely US$340 (which is low even as per the general income levels of US$430 and US$1,090 for low-income and middle-income economies respectively) has already taken major strides in integrating herself with a globalized world trade order and is committed to fulfilling her multilateral obligations. It is her perception that the multilateral trading system is itself likely to gain in credibility and acceptance if the sectors of comparative advantage to the developing world are liberalized early, justified market access is not denied to them and enough time and resources are made available to the developing world to catch up with their developed country trading partners. To this end, it is our perception that the concerns of special interest to developing countries should be addressed early and the enabling special and differential treatment provisions for developing country members enshrined in the WTO Agreements translated into specific, enforceable dispensations.

Índia.
India is the 18th largest export economy in the world. In 2018, India exported $256B and imported $344B, resulting in a negative trade balance of $88.1B. In 2018 the GDP of India was $2.26T and its GDP per capita was $6.57k.
The top exports of India are Refined Petroleum ($25.4B), Diamonds ($24B), Jewellery ($12.6B), Packaged Medicaments ($11.6B) and Cars ($6.36B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Crude Petroleum ($60.7B), Gold ($22.9B), Diamonds ($19B), Coal Briquettes ($12.7B) and Telephones ($10.6B).
In 2018 India exported $256B, making it the 18th largest exporter in the world. During the last five years the exports of India have decreased at an annualized rate of -1.585%, from $274B in 2018 to $256B in 2018. The most recent exports are led by Refined Petroleum which represent 9.9% of the total exports of India, followed by Diamonds, which account for 9.3%.
In 2018 India imported $344B, making it the 14th largest importer in the world. During the last five years the imports of India have decreased at an annualized rate of -8.912%, from $420B in 2018 to $344B in 2018. The most recent imports are led by Crude Petroleum which represent 17.6% of the total imports of India, followed by Gold, which account for 6.65%.
Balança comercial.
As of 2018 India had a negative trade balance of $88.1B in net imports. As compared to their trade balance in 1995 when they had a positive trade balance of $340M in net exports.
Destinations.
Economic Complexity of India.
Espaço de produtos.
O espaço do produto é uma rede que conecta produtos que provavelmente serão co-exportados e podem ser usados ​​para prever a evolução da estrutura de exportação de um país.
India exports 354 products with revealed comparative advantage (meaning that its share of global exports is larger than what would be expected from the size of its export economy and from the size of a product’s global market).
Complexidade e Inequidade de renda.
Nesta versão do produto, os produtos são coloridos de acordo com o índice Gini do seu produto ou IGP. O PGI de um produto é o nível de desigualdade de renda que esperamos para os países que exportam um produto. Para mais informações, consulte: Vinculando a complexidade econômica, as instituições e a desigualdade de renda e as restrições estruturais da desigualdade de renda na América Latina.
Ranking de Complexidade Econômica.
Nesta versão do produto, os produtos são coloridos de acordo com o índice Gini do seu produto ou IGP. O PGI de um produto é o nível de desigualdade de renda que esperamos para os países que exportam um produto. Para mais informações, consulte: Vinculando a complexidade econômica, as instituições e a desigualdade de renda e as restrições estruturais da desigualdade de renda na América Latina.
More on India from our other sites.
Globally Famous People of India.
This treemap shows the cultural exports of India, as proxied by the production of globally famous historical characters.
Globally Famous People of India by City.
This treemap shows the cultural exports of India by city, as proxied by the production of globally famous historical characters.