India may take some time to join OECD

The Organisation for Economic Co-operation and Development (OECD) may have opened its doors for India, but the government is unlikely to rush for membership, given the commitments it might have to undertake.

With over 200 instruments that a country has to sign, India can have reservations on some of these. For instance, India as a signatory will have to agree to the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions or the two instruments related to nuclear energy. The anti-bribery convention requires a signatory to put in place legal provisions to initiate action against its citizens if they are found to be bribing foreign officials to influence export orders.

According to an OECD official who has been involved with accessions, the nuclear energy-related conventions can be tricky, since India has in the past refused to sign the Nuclear Proliferation Treaty and the Comprehensive Test Ban Treaty.

Similarly, OECD's investment agreement has certain issues which are at variance with India's stated position. While Indian rules comply with the standards on post-investment national treatment and there is a shift towards automatic approval, the standstill clause is being seen as a hurdle.

A standstill clause will restrict India's ability to lower a foreign investment ceiling once it commits to a certain level for a sector. At the World Trade Organization, where a services agreement is part of the Doha agenda in many cases, India has offered to allow foreign investment up to a level which is less than the present threshold. This, the government has argued, was done to ensure that it has flexibility.

But these issues will have to be dealt with once negotiations for membership start. For the moment, OECD is only trying to enhance the level of engagement through review of various aspects of India's economic policy. For starters, an investment policy review will be released tomorrow and the Paris-based institution is keen on undertaking a review of the regulatory regime.

Besides, India has agreed to the OECD's Programme for International Student Assessment (Pisa). The programme assesses the ability of 15-year-old students of a country to meet future challenges, communicate, analyse and reason effectively.

India, along with China, Brazil, South Africa and Indonesia, are identified as one of the five enhanced engagement countries with a view to a permanent membership in the future.

To become a member, a country has to receive an invitation. While each country has a tailor-made accession roadmap, which includes a technical review by various OECD committees, additional requirements and political issues can also be included. Political issues can range from democracy to human rights and can be raised by the OECD Council, the apex decision-making body comprising its 30 member countries.