NEW DELHI :High-level talks between New Delhi and Brussels during the first India-European Union Trade and Technology Council (TTC) meeting last month have eased trade tensions between the two parties, indicating a possible out-of-court settlement in the ongoing information communications technology (ICT) dispute, a government official said.
NEW DELHI :High-level talks between New Delhi and Brussels during the first India-European Union Trade and Technology Council (TTC) meeting last month have eased trade tensions between the two parties, indicating a possible out-of-court settlement in the ongoing information communications technology (ICT) dispute, a government official said.
A solution for the dispute could be found because both India and the European Union (EU) are on the same page as far as China is concerned, the official said, requesting anonymity. While the EU is using a tariff rate quota (TRQ) to protect its steel industry from Chinese imports, India has raised tariffs to boost the manufacturing of electronic items in the country.
A solution for the dispute could be found because both India and the European Union (EU) are on the same page as far as China is concerned, the official said, requesting anonymity. While the EU is using a tariff rate quota (TRQ) to protect its steel industry from Chinese imports, India has raised tariffs to boost the manufacturing of electronic items in the country.
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This comes after the WTO panel upheld all EU claims against India and found that India’s tariffs of up to 20% on certain ICT products, such as mobile phones, were not in line with its WTO commitments.
The EU had challenged India’s tariffs in 2019 and was joined by other countries, including Japan, Taiwan, China and other countries.
The EU had claimed that up to €600 million of its technology exports to India were adversely impacted annually due to India’s imposition of tariffs on ICT products. However, the Indian government estimates that the WTO panel’s report will have little impact on India’s ICT products as the EU’s share of total Indian imports of ICT products in 2022 was 3.03% or $550 million.
“Europe is keen that we do not go to the appellate tribunal given that we are discussing several crucial issues in the TTC. Before filing for a deferment, Europe wanted some definitive understanding of what will be the line of discussion. India’s argument is that we should talk about a solution and give more time to discuss the same. Since India does not have an FTA with the EU, we cannot give them a specific carve-out. So, the exact nature of the solution is not known yet, but there is intent to discuss a solution. The 60-day time will end on 16 June,” the official added.
A joint deferment allows disputing parties to find a solution within a stipulated time. In this case, if the talks fail during the period, the EU could adopt the WTO panel report, and India could take the issue to the appellate body. Notably, the tribunal hasn’t been functional for nearly two years due to America’s blockage on the appointment of judges.
Meanwhile, India is also prepared for a retaliatory move by the EU. Mint earlier reported that India would retaliate against an EU law that allows it to suspend concessions and impose trade restrictions if the law is invoked in response to an Indian appeal against a ruling on ICT tariffs at the WTO’s dispute settlement.
Last month, a high-powered Indian delegation went to the EU, including external affairs minister S. Jaishankar, commerce and industry minister Piyush Goyal and information technology minister Rajeev Chandrasekhar to attend the first-ever EU-India TTC meeting.
As far as appeals by other countries are concerned, since Japan unilaterally adopted the WTO panel ruling, India has taken the case with Japan to the appellate body. “Japan went for the adoption of the WTO ruling; so we filed an appeal in void, and that part was blocked. Taiwan asked for a joint deferment for 90 days,” the official said.
Losing the ICT dispute at the WTO could hamper India’s electronic manufacturing sector and the flagship PLI scheme as New Delhi would have to eliminate duty on a range of electronic products. India aims to achieve electronics manufacturing worth $300 billion by FY26. As per Economic Survey 2022-23, the domestic electronics industry was valued at $118 billion as of FY20 and the industry.
Besides, India’s mobile phone exports are also on the rise and could get impacted due to the dispute.Mobile phone exports from India in FY23 crossed $11 billion mark, with iPhone maker Apple accounting for around half of the total exports. On 20 April, Mint reported, citing a government official, that the domestic industry is unlikely to witness any immediate impact of the WTO ruling, as a protracted legal dispute might take years before a final order.
“In a scenario of India losing this dispute, we would only owe compensation. But in this case too, the amount is less than what we have claimed from the US and EU on other disputes,” the official added.
Queries sent to the commerce ministry remained unanswered till press time.
