WTO rues India’s tweaking of trade policy

WTO rues India’s tweaking of trade policy

Geneva: India has further opened up to imports in the past four years but its habit of tweaking trade rules for domestic reasons risks undermining its efforts to boost commerce, the World Trade Organization (WTO) said on Wednesday.

India cut its average import tariffs to 12% in 2010/2011 from 15.1% four years earlier, part of its effort to provide a stable and active trade policy to encourage economic growth, the WTO said in a report.

“In certain circumstances, however, India also makes use of trade policy instruments to attain short-term objectives, such as containing inflation, which may detract somewhat from the stability sought," the report added.

Those short term changes meant India had to continually fine-tune its policies, racking up costs and increasing the complexity of its trade rules, the WTO said, in its trade policy review report on India.

“Trade policy seems to be lacking an overall thrust and is being conducted mostly on a sector or product basis. This has resulted sometimes in actions with an anti-export bias (such as setting minimum export prices or applying export taxes), in contrast with the asserted general goal of seeking export expansion," it said.

Among the short-term measures cited was the introduction of export licences for raw cotton in April 2010, which aimed to ensure domestic supply and limit price increases.

India was one of the WTO’s most litigious members, the report said, having initiated 209 anti-dumping investigations in the past four years, mostly against Chinese and other Asian shipments of chemicals, plastics, base metals and textiles that it considered to be unfairly cheaply priced.

The report said the average time for completing Indian export procedures had fallen to 17 days from 27 days in 2007, while imports now took 20 days to clear customs on average, less than half the 41 days needed in 2007.

Getting through customs now cost an average of $960 per container for imports and $945 for exports, it said.