Home / Opinion / Columns /  India’s moment seems near but could still prove elusive

The covid pandemic has wreaked devastation on a scale that usually occurs once in hundred years. The after-effects —lingering health problems, decline in productivity and disruptions to economic networks—will be felt for some time to come. Ironically, there is also the proverbial silver lining: India finds itself in a position to seek redressal for historical wrongs perpetuated in international organizations. But before that can reach fruition, India must decide which face to wear.

An arrow has already been shot across the bow of the World Trade Organization (WTO) which, if it travels the distance, could change the global trade grammar. India, along with 44 African countries, Cuba and Pakistan, submitted a note to the WTO (bit.ly/3T7E6dP) during its June 2022 ministerial. The 11-page note seeks to correct historical imbalances that were embedded during the organization’s founding in 1995 and put the developing world at a disadvantage.

Interestingly, some of India’s past concerns in other areas are increasingly finding resolution. In a recent op-ed, Dinesh Kanabar, CEO of tax advisory firm Dhruva Advisors, has written how India has contributed to the re-alignment of the global tax regime. It must also be said, without detracting from India’s dogged pursuit of its ambitions, that some of the global acknowledgement came grudgingly, and only when it suited rich nations. A shining example is the Pillar-1 recommendations from the Organisation for Economic Cooperation and Development (OECD), which has sought to create global rules that will make profitable multinational companies (MNCs) re-allocate a part of their profits to countries where they sell their products and services.

India was among the first countries to raise this demand because numerous MNCs operating in India were routinely shifting their profits to tax-friendly regimes and avoiding paying taxes in India. The US and European Union woke up to the problem when they realized large software companies were paying corporate taxes incommensurate with disclosed profits. US President Joe Biden’s flagship economic legislation—the Inflation Reduction Act, a defanged version of Build Back Better bill —has introduced a new 15% alternative minimum corporate tax for companies reporting a minimum of $1 billion profits. An accompanying White House fact sheet showed 55 of the US’s wealthiest corporations paid nil taxes during 2020.

It must also be remembered that India’s efforts at reforming global rules, including the WTO’s structural flaws, have continued across different governments in New Delhi, regardless of their political persuasion, like the successful passing of a baton in a relay race. For example, the Indian government’s struggle for trade equity at the WTO—particularly its steadfast pursuit of the Doha Development Agenda (DDA) since 2001—has been waged by various regimes, albeit inconsistently.

The latest submission for reconfiguring the WTO will now be discussed in the General Council, the trade body’s highest decision-making body. The emphasis will be on reviving some DDA commitments which advanced countries have stalled repeatedly. The note states: “WTO reform does not mean accepting either inherited inequities or new proposals that would worsen imbalances." Three issues are in sharp focus.

The first, of course, is correcting imbalances in a number of areas: lopsided agriculture trade rules which allow OECD countries to provide high subsidies and aggregate measures of support to farmers but deny the same to developing nations; rules for Trade-Related Intellectual Property Rights (TRIPS), which rich nations have converted into a competition thwarting instrument; disparity in subsidies for promoting industrialization, with advanced economies using them liberally during their industrial development phase but disallowing developing countries the same path to industrialization.

The second issue is getting the WTO to agree that the world is made up of different countries with differing development challenges and priorities. Implicit in this is the understanding that, depending on the level of development, state intervention of varying degrees will be required to address market failures or achieve development objectives. The message is clear: the WTO should not try to dictate a sovereign’s economic model. The third issue is the disproportionate impact of covid on developing countries and the WTO’s need to foster international cooperation of a kind that ensures universal and timely access to medical products and a clear pathway to faster economic recovery.

Covid’s aftermath and the Russia-Ukraine war now fortuitously situates India in a unique negotiating position, with a slightly larger share of voice in the global governance framework. As it happens, India also assumes the G20 presidency this year. The stars seem aligned but will yield results only when hard work trumps rhetoric; currently, double-speak threatens to muddy India’s crusading cape. At the WTO, for example, it is willing to get into bed with partners it belligerently vilifies at home. It cannot have one face at home and another for the global market. There is also the issue of a capacity deficit: India has let opportunities slip earlier, either because negotiators were overwhelmed or because some grand bargains were privately settled. India’s leadership must decide whether it wants to seize this moment or only exploit its rhetorical prospects.

Rajrishi Singhal is a policy consultant and journalist. His Twitter handle is @rajrishisinghal.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less

Recommended For You

Trending Stocks

×
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout