India contests WTO panel’s decision on ICT import duties

New Delhi: India has appealed to the World Trade Organization's (WTO) apex dispute resolution authority, the Appellate Body, to set aside a ruling that deemed its import duties on select information and communication technology (ICT) products incompatible with international trade regulations.

India said the WTO panel misinterpreted the regulations in its judgement, urging the Appellate Body to “reverse, modify, or declare moot and of no legal effect, the findings, conclusions, rulings and recommendations of the panel”.

The appeal's resolution could be significantly delayed as the tribunal has been inoperative for approximately two years due to the U.S. hindering the appointment of judges.

Previously, commerce minister Piyush Goyal pointed out that some Indian tariffs inadvertently affected developed nations. While avoiding direct mention of China, Goyal stated that India had maintained high tariffs on numerous products to compete with certain “non-transparent“ economies.

Earlier commerce minister Piyush Goyal pointed out that some Indian tariffs inadvertently affected developed nations. Without naming China, Goyal said India had maintained high tariffs on certain products to compete with certain “non-transparent“ economies.

The WTO's dispute panel announced on 17 April that India's import duties on some ICT goods breached global trade regulations. This verdict was prompted by a dispute lodged by the European Union (EU), Japan, and Taiwan against these tariffs. India submitted its appeal to the WTO's appellate body, the definitive arbitrator in such trade disagreements.

“The panel’s decision proceeds on the basis that India already had notice of expansion of tariff lines under its schedule, and thereafter India contributed through its inaction during the transposition process. As such, the legal standard to determine whether a member state contributed by its conduct cannot proceed on the basis that it already had notice of the error. These standards are different and the panel made a legal error in presuming that India already had notice of the error and notice is, in fact, essential before contribution through conduct is determined,” India told WTO.

In April 2019, the EU challenged India's introduction of import taxes on a wide range of ICT products, including mobile phones and components, base stations, integrated circuits, and optical instruments.

Mint had earlier reported that India planned to counter an EU law permitting the suspension of concessions and the imposition of trade restrictions if the legislation was used in response to an Indian appeal against an ICT tariff ruling at the WTO's dispute settlement panel.

The government meanwhile estimates that WTO’s panel’s report will have little impact on India’s ICT products as the EU’s share of total Indian imports of these products during the calendar year 2022 was 3.03%, estimated at $550 million.

Moreover, India has brought its duty rates to 0% with respect to two of the contested products, namely, headphones/earphones and electric convertors, since February 2022.

Government officials had earlier told Mint that even if the final arbiter on such trade disputes, starts working from now, it would take years to pronounce a ruling on the issue and therefore the production-linked incentive would not be impacted.

According to trade experts, if the appellate body also passes a ruling against India’s support measures, New Delhi will have to abide by that and make appropriate changes in the way it provides those measures.

Last year, India had appealed against a ruling of WTO’s trade dispute settlement panel which said that the country’s domestic support measures for sugar and sugarcane are inconsistent with global trade norms.