India Must Lift Bop Curbs By June To Avoid Wto Dispute

India could face dispute settlement proceedings at the World Trade Organisation (WTO) if it fails to detail a time schedule for removal of quantitative restrictions in June, according to senior government sources.

This will have serious implications for India since it could be asked to give up the balance of payments cover at one go after a period of eight months if the panel decides against India.

Senior government sources said the pressure from the United States, European Union and other developed countries was mounting and since an International Monetary Fund report also had said that India should do away with these restrictions, Indias failure to do so could well lead to dispute proceedings.

 

At the last balance of payments committee meeting in January, several OECD countries and IMF had expressed the view that India was in a position to ease out all quantitative restrictions within the next two years. The commerce ministry, however, was unable to indicate any time table in January since the agriculture minister raised strong objections against removing restrictions on import of agricultural products.

Sources said the United States Trade Representatives office may send a team in early March for discussions on the balance of payments issue.

India will have to offer a comprehensive time schedule for the removal of restrictions. This implies that import restrictions on all items including agricultural products have to be phased out over a period of time and that time schedule has to be indicated in June.

Sources pointed out while it was true that 5-6 other countries still maintained these restrictions, none of the other countries were in as comfortable a balance of payments position as India.

The commerce ministry proposal envisages the removal of restrictions in two main phases over 5 years. In the first phase, items allowed for import under the special import license list can be made freely importable and an equal number of restricted items can be moved to the SIL list. Also, dual use items can be made freely importable. In the second phase, the items that remain on the SIL list can be made freely importable.

A failure to indicate a definite schedule will imply that WTO members can take India to the dispute settlement body on its failure to remove the balance of payments cover. The procedure would last 8 months. At present, India is free to indicate a time schedule and can freely apply tariffs on products which have no tariff bindings.