8/14/2019 WTO Implications for Indian Economy

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8/14/2019 WTO Implications for Indian Economy

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Impact of WTO on Indian

Economy

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WTO & implications for Indian

Economy

One of the most dramatic events that have taken placein later part of 20th century was culmination of

GATT 1947 into WTO, which came into force on1st January 2005. This WTO has set expectationshigh in various member countries regarding spurt inworld trade where India has insignificant share in the

pie-Only 0.75% at the most. Even in IT exports theshare of Indian exporters is just peanuts in view ofoverall world market.

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Problems facing India in WTO & its

Implementation

Predominance of developed nations in negotiationsextracting more benefits from developing and leastdeveloped countries

Resource and skill limitations of smaller countries tounderstand and negotiate under rules of variousagreements under WTO

Incompatibility of developed and developing

countries resource sizes thereby causing distortions inimplementing various decisions

Non-tariff barriers being created by developednations.

Poor implementation of Doha Development Agenda

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Agriculture seems to be bone of contention for all typesof countries where France, Japan and some countriesare just not willing to budge downwards in matter of

domestic support and export assistance to farmers andexporters of agriculture produce.

Dismantling of MFA (Multi Fiber Agreement) and its

likely impact on countries like India

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Implications for India

It appears that India does not stand to gain much by

shouting for agriculture reforms in developedcountries because the overall tariff is lower in those

countries. India will have to tart major reforms in

agriculture sector in India to make Agriculture

globally competitive.

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It is likely that China, Germany, North Africancountries, Mexico and such others may reap benefit intextiles and Clothing areas unless India embarks uponmajor reforms in modernization and up gradation oftextile sector including apparels.

In Pharma-sector there is needfor majorinvestments in R &D and mergers and restructuring ofcompanies to make them world class to takeadvantage. India has already amended patent Act and

both product and Process are now patented in India.

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What India should do?

The most important things for India to address arespeed up internal reforms in building up world-classinfrastructure like roads, ports and electricity supply.

India's ranking in recent Global Competitivenessreport is not very encouraging due to infrastructure

problems, poor governance, poor legal system and

poor market access provided by India.

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Our tariffs are still high compared to Developedcountries and there will be pressure to reduce themfurther and faster.

India has solid strength, at least for mid term (5-7 years)in services sector primarily in IT sector.

India would do well to reorganize its ProtectiveAgricultural policy in name of rural poverty and Foodsecurity and try to capitalize on globalization ofagriculture markets.

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India must improve legal and administrative

infrastructure, improve trade facilitation through cuttingdown bureaucracy and delays and further ease its

financial markets.

India has to downsize non-plan expenditure in Subsidiesand Government salaries and perquisites like pensions

and administrative expenditures.

Corruption will also have to be checked by bringing infast remedial public grievance system, legal systemand information dissemination by using e-governance.

The petroleum sector has to be boosted to tap crude oiland gas resources within Indian boundaries and enteringinto multinational contracts to source oil reserves.

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Conclusion

It wont be a bad idea if Indian textile and garmentIndustry go multinational setting their foot in westernEurope, North Africa, Mexico and other suchstrategically located areas for large US and Europeanmarkets.

The performance of India in attracting major FDI has

also been poor and certainly needs boost up, if Indiahas to develop globally competitive infrastructure andfacilities in its sectors of interest for world trade.

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