Abdur Razik Khan EXIM Case 4

EXIM policy procedures and documentation
Name: Abdur Razik Khan

Roll. No: 21MBAIB050
PRN: 1062211878
CASE STUDY 4 - India’s trade policy: version 2.0 in the making
 SUMMARY
 The Uruguay Round of Negotiations ended in September 1994 with an agreement to

establish the World Trade Organization (WTO). This signalled the advent of a
multilateral system capable of upholding the rule of law for member countries'
participation in international trade.
 Twenty-five years later, while the WTO has been effective in enforcing its trade rules
through the dispute settlement system, it has not achieved the same level of success in
making new rules for the challenges that globalized trade faces today. Thus, many
countries, including India, are re-thinking about their post-WTO trade policy.
 The domestic exporting community is supported by programmes under India's Foreign
Trade Policy (FTP). The establishment of special trade and economic zones in various
regions of the nation is one of these development policies.
 On 14 March 2018, the US filed a complaint at the WTO claiming that India was
violating its WTO obligations by maintaining export promotion schemes that are
inconsistent with WTO rules prohibiting the export subsidies
 PROBLEM
The domestic exporting community is supported by programmes under India's Foreign Trade
Policy (FTP). The establishment of special trade and economic zones in various regions of
the nation is one of these development policies.
The WTO received a complaint from the US on March 14, 2018, alleging that India was in
breach of its WTO commitments by continuing export promotion programmes that are in
violation of the WTO's export subsidy ban[1]. The WTO Subsidies and Countervailing
Measures Agreement (SCM Agreement), which collectively punishes subsidies, including
those connected to exports, serves as the legal foundation for the legal challenge. According
to a report issued by the WTO panel tasked with investigating the complaints on October 31,
2019, some benefits resulting from India's export promotion schemes violate obligations on
India to stop providing export subsidies.
Indian businesses may be significantly impacted by this choice. The challenge's programmes
have historically aided Indian exports by offering incentives for cost-saving measures that
lower export costs and, as a result, have assisted in developing export strategies like
discovering new markets. It is equally important to consider the overall macroeconomic
environment in which this challenge has been launched. There are already uncertainties for
businesses around the world, including in India, due to the ongoing trade disputes between
the US and China, Europe, etc. The state of the Indian manufacturing sector as a whole is also
at best subpar. Due to both cyclical and structural factors, the Indian economy has been in
decline over the past few years. In light of this, a number of India's top exporting industries,
including the automotive, pharmaceutical, electronics and information technology, as well as
textiles and apparel, are most likely to be negatively affected.
 SOLUTION (An opportunity to revise trade policy):
Considering India's investment and industrial policies, the current regional and global trade
dynamics collectively provide a compelling economic and strategic case for India to
reevaluate its trade policy thoroughly. The break from the RCEP negotiations should be used
by India to carefully consider the lessons learned from the previous free trade agreements.
The Indian government is already acting pro-actively. Corporate taxes have recently been
reduced in order to combat the decline in private investment. Remission of Duties or Taxes
on Export Products (RoDTEP), a new export support programme that is WTO compliant, has
been unveiled by the Indian Finance Minister and is anticipated to take the place of the
primary export incentive programme that the WTO dispute panel has ruled is ultra vires.
There is a need to offer a similar level of support as is given to the current schemes given the
complexity of the applicable WTO rules. It is crucial for the government to carefully plan out
enough details for drafting the scheme in order to demonstrate compatibility with WTO rules.
Additionally, while doing so, it is crucial for various industry sectors to assist in explaining to
the government the specifics and peculiarities of their industry.
The WTO panel's ruling gives India the freedom to redesign its trade development and
promotion initiatives, such as those through special economic zones, in order to achieve its
developmental goals. Large-scale participation from industry and other stakeholders, along
with methodical coordination with different domestic regulators, may help India strengthen
its negotiating position and update its trade policy to version 2.0, which will also take into
account the current state of the economy.
***

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Abdur Razik Khan EXIM Case 4

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EXIM policy procedures and documentation

Name: Abdur Razik Khan

CASE STUDY 4 - India’s trade policy: version 2.0 in the making

 The Uruguay Round of Negotiations ended in September 1994 with an agreement to

 SOLUTION (An opportunity to revise trade policy):

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