Assignment No.

1
Business Economics

The implications of WTO Membership for Indian economy

in the last 10 years.

Submitted By:
Anchit Agrawal
331129
A Division

Faculty In-charge:
Prof. Neelkanth Athalye

The Background
After the Second World War, the world saw a need to uniform trade practices and other services.
This is because the world war left a deep impact on the economy of nearly all of the globe. The
only solution to cope up from this problem was seen as trading and hence mutually flourishing.
Also a global uniformity of trade practices was also needed so that MNCs could expand their
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businesses. Herein a global organizational meet occurred and hence a common consensus was
met resulting in the formation of GATT. GATT or General Agreement on Tariffs and Trade was
thus established in October 1947 with India being one of the founding parties. It served as a
negotiating point for developing countries like India and Brazil as well as for developed
countries like USA and UK. Various meetings and conferences were held after the inception of
GATT with agendas of development and mainly working on cutting various tariff barriers and
trade barriers in the market. As the world was changing therefore thinking of globalization and
other world changing prospects the world required a more stringent and organized forum. This
need lead to the formation of World Trade Organisation.

What is WTO?
The WTO can be viewed from many angles. It is a platform wherein representatives of various
nations come together to negotiate in terms of trade liberalisation for global benefit. It can also
be viewed as an organisation with a set rules and regulations made with common consensus
which govern the trade of the world. Also it can be viewed as a place wherein international
disputes can be solved easily and methodologically for mutual agreement.
WTO first appeared on 1st January 1995. It was an extension of GATT agreement which
happened on the Uruguay round. India was a proud founding member who first consented this
organisation. It has its headquarters at Geneva, Switzerland and has around 153 nations as its
members till date.

India and WTO

India has a prestigious designation as MFN (Most Favoured Nation) in WTO. This enables it to
have special rights as it is a developing country and also has a great say for development
concerns. In spite all of this, India has a lot of zones of concern regarding this WTO
membership. They are:
As it is a collection of viewpoints of different countries, therefore certain awkward
situations may arise.
WTO aims at liberalization of economy but some countries say that their voice are not
heard properly.
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India moreover has to improve its performance in various aspects. Improvement in various
agricultural practises, FDI and FII attraction also is required. Various administrative and legal
aspects of the country are also a barrier which India faces and has to be overcome by it with the
help and suggestions of organizations like the WTO. Economically, it must reduce trade barriers
and restrictions which in turn will result in further growth of the country and the world as a
whole.
a) Protection of Domestic Industries
Domestic Industries specifically of any nation mainly depends on the intensive labour and time
taken for effective production. The main reason a country invests this much amount and time
into this activity is because it gives a push to the countrys GDP if these reserves are maintained.
Hence, a country thinks of protecting its own domestic industry so that it can be stable if an
economic crisis arises in the economy. It is because of these type of precautionary measures that
a country thinks of protecting its own domestic industries. This concern becomes a major source
of problem for developing nations as developed nations also try to protect their industries. In the
Uruguay round negotiations a limit in domestic subsidies was negotiated which have affected
India to a large extent.
The highlight point is that even if a lot of trade barriers have been reduced then also the
developed countries will have a lot of funds to provide subsidies to domestic producers (which is
in itself a very difficult outcome) there will still be possibilities that the developed countries will
not get a chance to boost their economy easily.

b) Trade in Agricultural Products

India had been a founding member of GATT, therefore it already followed some of the rules like
keeping up with changing duty rates. It took outmost care that the countrys essential beings like
basic rural items and eatable oil would be far better protected. On the basis of the 10 years
experience that India has had with the WTO, personally I would say that India must keep voicing
its opinions and negotiating agreements as the prime member because trading is the backbone for
the growth of an economy. Moreover it must also have a clear and coherent objectives of the

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future for the country so that a better negotiation keeping in line with the changing trends and
global scenario can be considered.
Also for the effective operation of the organisation itself the member countries must take an
initiative and make in new policies and strategies so that they can be easily understood by all
member nations. The drawbacks of various agricultural policies should also be identified and
discussed for better negotiation.
India must also improve its means to give subsidiary allowances to its producers (which are a
majority in the nation) so that the producers maintain their sentimental value and also take care
of their crops. Also the main source of subsidy for them is the income tax benefit what they get
and not any indirect income is received by them.
c) EX-IM Policy
The EXIM policy are set rules given by Directorate General of Foreign Trade for Export and
Import of Goods and services in the country. This was established so that special focus to the
Exports and Imports of the country can be given. The government publishes this report at regular
intervals. Indias affiliation with WTO has always lead it to think on these developmental lines
which will always give it that split second advantage over other developing countries.
Special Economic Zones or SEZ was also a concept developed by India on the basis of
promoting growth in the industry as well as promoting development of the country. Also
vocational institutions like ATDC (Apparel Training and Design Centre) have been established so
as to aid these industries in skilled man power.

d) Technology Transfer
The internal load of outside direct speculation has been researched. The diverse IPR measures
are inspected independently. The outcomes demonstrate that separately patent rights, copyrights,
and trademark rights are measurably critical determinants of FDI. Notwithstanding, when each of
the three measures are entered together, just the patent rights variable remains emphatically huge.
The aftereffects of isolating the example into diverse nation gatherings are demonstrated. This
gives a sign whether the impacts of IPR on internal FDI fluctuate by level of monetary
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advancement. To save space, just the outcomes with patent rights are demonstrated since patent
assurance is the more essential licensed innovation component concerning internal FDI. As the
table demonstrates, the positive relationship of IPRs to internal FDI is available for every one of
the three nation wage bunches. For every situation, the internal FDI stock is decidedly and
essentially identified with more grounded patent assurance. Be that as it may, the quantitative
relationship does shift by level of advancement. The effect is biggest among newly created
nations. A 1% reinforcing of patent laws is connected with an 11.2% expansion in the load of
internal FDI in gathering 1, yet with an under 2% increment among gatherings 2 and 3 nations.
e) Impact on Trade Block
Trade blocks are essential commodities in trading. Globally, WTO helps in reducing trade
barriers but nationally it is the trade blocks which try to reduce trade barriers. The cooperation of
these trade blocks is fundamentally required so that economic growth can occur freely. Hence
developing nations like India have asked for reduction in tariff rates. India also possesses the
advantage that it has skilled manpower. This membership with the WTO will impact the trading
blocks in a positive way if the negotiations work in a favourable manner for the country.
f) Death of WTO in the future
WTO serves as an intermediator organisation regulating trade practises but with the increasing
global networking and cooperation looks like this world would not require this a lot anymore.
China exports manufactured goods, India exports services, Brazil exports agricultural products
and Russias economy depends on natural resources. All of these countries might want more
liberalisation to take place but one this is for sure, if they want to negotiate without the
interference of other developed powers like UK and USA they would do that on a one on one
basis. Hence eliminating the need for WTO. Moreover, the developing nations will keep their
WTO discussions unending until a required negotiation cannot be achieved. Therefore it can be
safely concluded that WTO is dying a slow and painful death.

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