‘WTO final order on IT tariffs may take 5 years’

The WTO’s dispute settlement panel found that the tariffs imposed by India on mobile phones and electronic equipment are in violation of the General Agreement on Tariffs and Trade.

India has rejected the EU’s proposal to resolve the issue using multi-party interim appeal arbitration, an alternative to the dispute settlement mechanism and is working on its appeal which will be filed in the next 50 days .

“The EU says that taking it to the tribunal is not in good faith, but the Appellate Body of the WTO is the final dispute settlement body and India will go to the apex body for resolution. There should be no apprehension for the next five years. The Appellate Body of the World Trade Organization is not functioning. And even if that impasse is resolved, it will take years to choose members and resolve the current dispute. Therefore, there can be no impact on the production linked incentive scheme. Significantly, the PLI scheme is operational from 2021-22 to 2025-26.

Experts also said that a setback in the appellate tribunal would only mean that India would be forced to remove the protection by reducing duty and it would not affect the incentives offered by the government under the PLI scheme.

“In the scenario of India losing this dispute, we will only have to pay compensation. But even in this case, the amount is less than what we have claimed from the US and EU on other disputes.”

The official further said that the report of the WTO panel will not have any immediate impact on India’s ICT products as the EU accounts for 3.03% of the total imports of the said ICT products in India during the calendar year 2022, which is estimated at 550 million. dollars, while Japan and Chinese Taipei are at 0.33%, estimated at $24 million and 2.86%, respectively at an estimated $235 million.

Further, India has brought down its duty rates in respect of two disputed products, namely, headphones/earphones and electric converters, to 0% with effect from February 2022.

It was alleged by the complainants that India has imposed import duty on certain ICT products of up to 20% which is higher than the bound rate of 0% prescribed in the Schedule of Concessions.

The products in question include mobile phones, mobile phone parts and accessories, line telephone handsets, base stations, static converters, electric conductors and cables.

“India has argued that the imposition of duty measures against the above products is legally valid as these products do not fall under the purview of the Information Technology Agreement-1 (ITA-1), to which India is a signatory. Thus, flowing from the commitments under ITA-1, India has accordingly amended its concession schedule submitted to WTO,” the official said.