India is expected to appeal a recent ruling by a World Trade Organization (WTO) panel on its imposition of tariffs on mobile phones and electronic components in a bid to ensure the ruling does not affect the country’s domestic manufacturing targets, especially in a sector that has seen capacity building, a senior government official said.
On Monday, New Delhi faced a setback with the WTO’s dispute settlement panel ruling against the import tariff imposed by it on a wide range of information and communications technology (ICT) products, including mobile phones. .
The panel ruled that India had violated world trade rules and sided with a complaint from the European Union (EU), Japan and taiwan.
In 2019, the EU challenged the 7.5% import tariff, later increased to 15%, imposed by India in 2017 on a wide range of IT products, such as mobile phones and components, as well as integrated circuits, to curb imports and increase domestic production. Japan and Taiwan filed similar complaints that same year.
India later raised the tax to 20 percent despite opposition from several members of the trade organization.
India is a signatory to the Information Technology Agreement (ITA), which entered into force in July 1997, and accounts for more than 95 percent of world trade in goods such as computers, telecommunications equipment, semiconductors, and scientific instruments. As part of a signatory to the deal, India is required to remove tariffs on these products.
“Some of the products mentioned in this ruling did not exist when the ITA was signed. That will be our main presentation in the appeal,” the official said.
Industry insiders said that if the appellate body were to rule against India as well, it would mean the country would have to make changes to its tax structure. However, the chances of that happening are slim as the WTO appeals mechanism is currently not working because nominations were blocked for the appellate body, which led to most of the panel reports being appealed and left behind. without resolving disputes.
“We would like to see manufacturing in India grow and we are confident that the government will take a considered decision on this,” said Ali Akhtar Jafri, director general of the Association of Information Technology Manufacturers (MAIT). the indian express.
However, if India made changes to its tax structure due to the WTO decision, experts said, that could have an impact on some of its domestic manufacturing initiatives, such as the production-linked incentive (PLI) scheme. for smartphones.
“We believe that the impact of this ruling will not be severe in the short term…if the decision on the ruling affects the structure of functions in India, it could affect the momentum of local value addition. If India loses its appeal, the impact will be much more severe,” said Tarun Pathak, director of research at market intelligence firm Counterpoint Research.
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