IT Tariffs: India To File Appeal In May Against WTO Panel Ruling — BQ Exclusive

The panel had ruled that India's import duties on certain IT products are inconsistent with the global trade norms.

<div class="paragraphs"><p>(Source: WTO website)</p></div>
(Source: WTO website)

India is going to file an appeal against the ruling of World Trade Organization's panel regarding the tariffs on certain IT products, according to two officials with knowledge of the matter, who spoke on condition of anonymity.

The appeal will likely be filed by May-end, said one of the officials mentioned above.

BQ Prime had previously reported that India would likely file an appeal after the WTO's dispute settlement panel on April 17 ruled against the country in the case, initiated by the European Union, Japan and Taiwan in 2019. The panel ruled that India's import duties on certain IT products are inconsistent with the global trade norms.

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Certain items like smartphones and updated electric wireless network technology were not in existence when India signed the Information Technology Agreement back in 1997, said one of the officials quoted above.

The argument raises the question whether the country is bound by the schedule of concessions for newly developed products, to which it never intended to apply a nil-bound rate when it signed the agreement.

The ITA was originally concluded by 29 participants at a Singapore Ministerial Conference in December 1996. According to the WTO website, since then, the number of participants has grown to 82, representing about 97% of world trade in IT products.

The agreement calls for zero duty on a host of IT products. It was later expanded to cover an additional 201 products in 2015.

India argues that the products currently under levy were only subsequently defined and that India, under the World Customs Organisation, wanted an 'errata' that these items are not covered but that was not published, the official mentioned above said.

An 'errata' refers to an error. According to the panel report, India's arguments include the existence of an 'error' in the transposition of its schedule of concessions.

No Immediate Impact

After the publication of a WTO panel report, countries have 60 days to file an appeal before the panel's recommendations become the final verdict on the subject.

Though India is gearing up for an appeal, the WTO appellate body is currently not functioning. The appointment of new judges to the appellate body have been halted by the United States, which has cited issues like judicial overreach. This has left many panel reports being appealed in the void, leaving the disputes unresolved.

With the duty still in place, the domestic mobile manufacturing industry is the biggest benefactor. This also offers space for the domestic Production-Linked Incentive scheme to take effect and give Indian manufacturers a competitive advantage.

In terms of the policy of raising the duties, it has served India well and will continue to do so, and there is no need for apprehension or concern for industry, the official mentioned above said.

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