India and WTO:

Impact of WTO on various aspects of Indian economy:

India being a founder member of the WTO has been following the WTO decisions, bu
t as a consequence, certain effects on the Indian economy have become evident.
1. Effects On Indian Industry:
WTO has been urging India to lower import duties, remove controls on consumer go
ods imports, reduce quantitative restriction, etc. Under the Uruguay Round Agree
ment, India offered to reduce tariffs on capital goods, components, intermediate
goods and industrial raw materials.
As the protection afforded by import duties gradually disappeared, Indian indust
ry had to face increasing competition from foreign goods. The Confederation of I
ndian Industries estimated that the domestic capital goods industry lost orders
worth Rupeese 5000 crores due to the duty free nature of foreign capital goods.
On the contrary indigenous producers are subject to a variety of taxes.
Concequently imports of finished products are displacing domestic finished produ
cts leading to shut down of many industrial units.
Also the WTO ruled against India on its quantitative restrictions on 2700 agricu
ltural and related products resulting in large quantities of foreign consumer go
ods entering the Indian economy and seriously damaging it.
Similar was the situation when India reduced tariffs and allowed imports of on s
econd hand cars.
Chinese goods have been flooding the Indian markets for the past few years. As C
hina is now a part of WTO action against China can only be taken through the WTO
. Also it is very difficult to make a dumping case against China due to its nontransparent economy and the fact that goods enter the Indian economy through bot
h legal and illegal routes.
2. Effects of WTO on SSI:
WTO agreements do not discriminate on the basis of size of industries and enterp
rises. In the WTO regime reservations may have to be withdrawn. Preferential pur
chase and other support measures may not be available forcing SSIs to compete wi
th both large domestic producers and cheap imported products. Consequently the S
SI sector which yeilds employment to a large section of the population is in jeo
pardy. The SSIs do not have adequate resources to form and file dumping cases ag
ainst foreign countries due to prohibitive costs. Similarly large MNCs are slowl
y eating inot the traditional market of the SSIs rendering them sick and causing
many ofthem to shut down.
3. Double standards of developed countries:
Developed countries esspecially the USA, display great hipocracy in its dealing
with developing nations via the WTO. All products which are considered harmful t
o the USA are denied entry on grounds of environmental, dumping or human rights
laws. Many of the USA's laws are in direct violation of the WTO's directives. Th
is dual standard on the part of the USA
has particularly damaging effect on the Indian textile industry.