India is a founding Member of the WTO. It provides MFN treatment to all other WTO Members and other trading partners. India has also accepted the Fourth and Fifth Protocols and is a party to the Information Technology Agreement. It has been an observer to the WTO Government Procurement Agreement since 10 February 2010.
India's most recent notifications (Table 2.1) include those for domestic support for agriculture, import licensing procedures, and quantitative restrictions with regard to the WTO Trade Facilitation Agreement. India has not yet submitted its Category A notification.
Table 2.7 Notifications to the WTO, 1 January 2011–13 March 2015
Notification of laws, regulations and administrative proceedings relating to safeguard measures
Agreement on Technical Barriers to Trade
Proposed technical regulation
General Agreement on Trade in Services
Notification of Economic Integration Agreement
Source: WTO Secretariat.
India also remains active in taking issues to the WTO Dispute Settlement Mechanism. During the period under review it was involved in three disputes each as complainant and as defendant (Table 2.2). In addition, it was involved in 29 disputes as a third party.
While India remains a supporter of multilateral trade liberalization, like other WTO Members it has negotiated a number of regional trade agreements. India currently has a network of 15 RTAs in force that have been notified to the WTO. These are mainly with its neighbours and other Asian countries. In addition, it has a few RTAs with countries in Latin America (Chile, MERCOSUR), and is a party to the Global System of Trade Preferences (GSTP) but these are partial in their scope and cover very few tariff lines (Table A2.1).
Since the previous Review in 2011, two agreements, with Malaysia and Japan, have entered into force. In addition, the parties to the South Asian Free Trade Area (SAFTA) have now completed negotiations to add services commitments to the Agreement, although this has not yet been notified to the WTO. India is also party to an early harvest agreement in goods with Thailand but this has also not been notified to the WTO. According to the authorities the process to notify these agreements will be initiated in consultations with India's trading partners. On 9 September 2014, India signed the Trade in Services and Investment Agreement with ASEAN (the Agreement on Goods has been in force since 1 January 2010 and was notified by the parties to the WTO). The Services and Investment Agreement is expected to come into force on 15 July 2015.
With regard to its RTA negotiations, India has made "early announcements" of negotiations with the European Union, EFTA, SACU and the Bay of Bengal Initiative on Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) with Bangladesh, Bhutan, Myanmar, Nepal, Sri Lanka and Thailand. Negotiations are also ongoing with Australia, Canada, GCC, Indonesia, Israel and New Zealand and being considered with Egypt and Mauritius. Finally, India is also a party to negotiations on a Regional Comprehensive Economic Partnership (RCEP) Agreement between the 10 members of the Association of South East Asian Nations (ASEAN) and six of their FTA partners (Australia, China, India, Japan, the Republic of Korea and New Zealand); negotiations which commenced in August 2012 are expected to be completed by end 2015.
Out of 15 RTAs notified by India to the WTO, four include provisions on services as well as goods (with the Republic of Korea, Malaysia, Japan, and Singapore) although, as noted, the SAFTA Trade in services (SATIS) agreement is in force but not notified to the WTO while India and ASEAN have recently signed a Services and Investment Agreement. India's tariff liberalization in its RTAs tends to vary greatly depending on the negotiating partner. Among its notified RTAs that have been considered by either the Committee on Regional Trade Agreements or the Committee on Trade and Development, India's tariff liberalization commitments range from zero tariffs liberalized in the partial scope Agreement with Chile, to 23.6% in its FTA with Singapore, 75.3% with Malaysia and 86.6% with Japan. With ASEAN, India commits to liberalize 75% of its tariff lines for imports from ASEAN countries. According to the authorities partial scope agreements should not be a measure for computing the level of liberalization; liberalization should be looked at only in reference to full scope agreements.
In services, India's agreements are largely based on a GATS positive list approach and they have made incremental improvements to its GATS commitments. However, as stated by India in its most recent services agreement with ASEAN "all the schedules tabled by India are well within the existing autonomous regime of India"20, suggesting that while commitments on services go beyond its GATS commitments, India's applied regime remains more liberal.
There have been concerns expressed in recent years regarding the potentially negative impact of RTAs, notably on Indian industry. The Department of Commerce recently conducted an internal analysis of various FTAs, and found that the utilization of several FTAs by India's FTA partners was not significant.21 Given the low impact of FTAs on Indian industry, it is not clear what the immediate benefits of existing FTAs are and what if any implications for India's policy there may be on its current RTA negotiations. According to the authorities each negotiation is driven by the overall balance of interests with the specific trading partner(s).
220.127.116.11 Preferential trade arrangements
India is a recipient of preferences under the Generalized System of Preferences from Australia, Canada, the European Union, Japan, New Zealand, Norway, Switzerland, Turkey, the United States and the Customs Union between Belarus, Kazakhstan and the Russian Federation.
Since 13 August 2008, India also provides duty free and quota free treatment (Duty Free Tariff Preference Scheme) to least developed countries following the WTO Hong Kong Ministerial Declaration of December 2005.22 The scheme is open to all LDCs, and as of 1 January 2015 31 LDCs had indicated their interest in the scheme and therefore received preferential treatment.23 The scheme was to reduce duties on around 85% of the tariff by 20% per year and phase them out over five years. Effective 1 April 2014, the scheme now provides duty free market access on around 96% of India's tariff lines at the HS 6 digit level with 1.8% of the tariff excluded from the scheme.24 In the 2014/15 tariff, 94.7% of the tariff was covered by the scheme with 94.1% being duty free (Section 3.1.8).
2.3.3 Other agreements and arrangements
India has signed bilateral investment treaties with 83 countries. Double tax avoidance agreements have been signed with 71 countries.