The Commerce and Industry Ministry is preparing to challenge a recent World Trade Organisation’s (WTO) dispute panel ruling against India’s import duties on certain key information and communication technology (ICT) products, including mobile phones and base stations. It is in consultations with its legal team to finalise its arguments, according to a source tracking the matter.
Complaints against India’s import duties on the identified ICT products were filed by the EU, Japan and Chinese Taipei.
“India continues to hold that it is within its rights to impose import duties on mobile phones and the other ICT products mentioned in the panel report and believes that the complainants were trying to take advantage of a technical error made by the country while updating its tariff lines. It will appeal against the panel ruling. It is being vetted by legal experts,” the source told businessline.
Support domestic manufacturing
It is important for India to retain the flexibility to impose tariff on ICT products to support domestic manufacturing which has got a boost with the launch of Production Linked Incentive scheme. Once an appeal is made at the WTO Appellate Body, India may get a long reprieve as the body is at present dysfunctional with the US holding up the appointment of judges.
In their complaints, the EU, Chinese Taipei and Japan had held that the identified ICT products, including mobile phones, on which India imposed import duties up to 20 per cent, fell within the scope of the relevant tariff lines for which it had set the bound rate of 0 per cent. So anything beyond that went against rules.
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New Delhi’s primary defence was that products constituting `new technologies’, such as smartphones, developed subsequent to the conclusion of the ITA (IT Agreement, 1996, under which signatories had agreed to eliminate tariffs on several ICT products) were outside the scope of its WTO duty-free commitments.
It had asserted that its binding tariff commitments are set forth in the ITA, and those commitments were static and did not change due to their incorporation into India’s WTO Schedule.
Arguments
The panel rejected these arguments. It ruled that since India’s tariffs on the identified ICT products were more than the maximum tariff rates set out in its WTO Schedule of commitments, it had acted inconsistently.
India had further argued that when it was transposing its tariff lines to an updated Harmonized System (HS), it had assumed that the scope of its WTO commitments was limited to the scope of its ITA undertakings and that the scope of those tariff commitments would not be expanded through the transposition process. It said that it made an error when transposing its tariff lines to the updated HS and should be allowed to correct it.
“However, the panel found that India had failed to demonstrate that this assumption constituted an essential basis of India’s consent to be bound by the certified Schedule. The Panel also found that India was put on notice of the possibility that its WTO tariff commitments in its HS2007 Schedule may have expanded from those set forth in its HS2002 Schedule, and similarly, that its WTO tariff commitments in its HS2007 Schedule may have expanded from those set forth in the ITA,” a WTO summary noted.
India will challenge the rejection of its arguments as it believes they were all valid and is ready to take the dispute to its very end, the source said.