India and World Trade Organization (WTO): Gains and Losses – UPSC Economy Notes

India’s membership in the World Trade Organization (WTO) has been a double-edged sword. While it has opened doors to global markets and boosted economic growth, it has also presented challenges for domestic industries and agriculture. This essay will explore both the gains and losses India has experienced as a member of the WTO, examining how trade liberalization has impacted its development.

Gains for India:

1. Most Favored Nation (MFN) Status:
   • India has enjoyed MFN status within the 164-member WTO, ensuring non-discriminatory treatment in trade relations.
2. Democratic Decision Making:
   • The one country, one vote system in decision-making makes WTO a democratic body, preventing the dominance of rich countries.
3. Rule-Based Trading System:
   • India benefits from a rule-based trading system, providing predictability and stability in international trade.
4. Impartial Dispute Settlement:
   • The impartial trade dispute settlement process in the WTO ensures fairness, eliminating bilateral pressures and threats.
5. Trade Liberalization Schedule:
   • The definitive schedule for trade liberalization provides special protection to calibrate alignment with the global economy.
6. Global Pharma and R&D Hub:
   • India has the opportunity to emerge as a global hub for pharmaceuticals and research and development (R&D) investments, facilitated by the acceptance of Trade-Related Aspects of Intellectual Property Rights (TRIPS).
7. Services Sector Advantage:
   • India’s advantage in the services sector positions it to benefit from the opening up of global trade in services.
8. Alignment with Economic Reforms:
   • The globalization process facilitated by the WTO aligns with India’s economic reforms initiated in 1991.

Concerns and Dissatisfaction:

1. Stalled Doha Development Issues:
   • Lack of progress on the Doha Development Round issues has been a source of dissatisfaction for India.
2. Breakdown in Dispute Settlement:
   • The dispute settlement process in the WTO has faced challenges and breakdowns, affecting the resolution of trade disputes.
3. Restrictions on Food Subsidy:
   • Unfair and severe restrictions on India’s food subsidy programs have been a point of contention.
4. Challenges in Agricultural Trade:
   • Developed countries’ actions are seen as defeating the principles of free and fair agricultural trade.
5. National Security Clauses:
   • The questionable use of national security clauses by the USA is deemed unacceptable by India.
6. Threats from New Issues (E-commerce):
   • The insertion of new issues like e-commerce is perceived as a threat to India’s interests at the current stage.

In summary, while India has gained significantly from its participation in the WTO, there are ongoing challenges and areas of dissatisfaction, particularly related to the stalled Doha Round, dispute settlement issues, agricultural trade, and emerging challenges in the form of new issues like e-commerce. The dynamics between gains and concerns shape India’s stance and engagement within the WTO.

FAQs

1. How has India benefited from the WTO?

• Increased market access: India gained access to foreign markets for its exports like textiles, IT services, and agricultural products.
• Trade liberalization: Reduced tariffs on imports have led to cheaper goods for Indian consumers and businesses.
• Investment opportunities: The WTO framework encourages foreign investment, boosting India’s economic growth.

2. What are some challenges India faces in the WTO?

• Protection of domestic industries: Cheap imports can hurt Indian businesses, especially in agriculture.
• Intellectual property rights: Stricter IPR rules can limit access to affordable medicines and technology.
• Developed vs. developing nations: Developed nations often have more resources to navigate complex WTO disputes.

3. Has India been successful in raising its concerns at the WTO?

• Yes, India has used the WTO dispute settlement mechanism to challenge unfair trade practices by other countries.
• However, the process can be lengthy and expensive, and the rulings may not always favor India.

4. How can India improve its position in the WTO?

• Strengthening domestic industries: Investments in infrastructure, technology, and skill development can make Indian products more competitive.
• Building alliances: Collaborating with other developing nations can give India a stronger voice at the WTO.
• Focusing on developmental issues: India can push for WTO rules that consider the needs of developing economies.

5. Is India considering leaving the WTO?

• Unlikely. While India may be critical of certain WTO policies, it still benefits from the overall framework.
• The focus is likely to be on reforming the WTO to make it more fair and equitable for developing countries.

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