WTO ruling against India in tech tariffs dispute with European Union

India ups the ante in trade tussle

India will hit back at the European Union (EU) in case the trade bloc decides to invoke its domestic law to impose retaliatory tariffs on the nation, a senior official said, amid tensions between the two sides after a recent World Trade Organization (WTO) ruling against New Delhi over imposition of import duties on ICT (information communications technology) products.

The EU’s domestic law allows the trade bloc to retaliate if any country goes ahead with ‘an appeal into void’. The WTO’s appellate body, its highest adjudicating authority, is nonfunctional at present due to lack of judges.

This, according to India, will be in violation of the WTO principles since invoking the domestic law is not in conformity with the rules of the global trade body, the official told Business Standard. In such a case, India can inform the WTO and take counter retaliatory action by imposing tariffs on imports from the EU, the official added. 

“In international jurisprudence, this is not in conformity with the WTO rules. The EU has brought its law but never used it, neither has it been put to test. It remains to be seen if they will invoke the domestic law. Since this is in contravention of violation of WTO rules, India can also retaliate,” the official said.

India, however, believes that such retaliations will eventually be detrimental to the trade on both sides.

The development comes against the backdrop of a WTO panel’s April 17 ruling that favoured three complainant nations, including the EU, and said India had violated global trading norms over imposition of import duties on ICT products such as mobile phone, components, and telephone handsets. It had also asked New Delhi to eliminate tariffs on technology products.

An EU spokesperson had told Business Standard that the EU might impose retaliatory tariffs on Indian goods if New Delhi didn’t abide by the WTO ruling.

India’s immediate stand was to appeal against the judgment. A week later, the commerce department in an official statement said that India was taking ‘necessary steps’, and also exploring the options available in light of its ‘WTO rights and obligations’. Besides, the panel’s report is not expected to have any immediate impact on India’s information and communication technology (ICT) products.

The EU had also approached India to resolve the matter through multi-party interim appeal arbitration (MPIA) arrangement. However, India has been against MPIA as a mechanism and is in favour of the restoration of the WTO appellate body.

MPIA is an alternative system for resolving WTO disputes that are appealed by a member nation in the absence of a functioning appellate body. It comprises 53 WTO member nations.

Government officials also believe that the EU has not been majorly affected by the imposition of IT tariffs. As per data compiled by the commerce department, the EU’s share of total imports of such ICT products into India during the calendar year 2022 was at 3.03 per cent, estimated at $550 million.