Is the Indian government expecting a spike in trade disputes?

New Delhi: With rise in protectionism in developed countries, India has increased its allocation for international trade disputes four-fold in its budget presented by finance minister Arun Jaitley earlier this month.

The Rs1.2 crore provision for expenditure in 2018-19 against Rs30 lakh a year ago is mostly for paying the lawyers who need to be engaged to represent India’s case at the World Trade Organisation (WTO), a commerce ministry official said, speaking under the condition of anonymity.

India has so far launched 23 trade disputes at the WTO against other countries, while it is a respondent in 24 such cases.

While India and the US have been strategic partners, both countries are fighting out on several issues at the WTO dispute settlement mechanism.

After consecutively losing two cases to the US at the WTO on its ban on the US poultry imports claiming bird flu fears and subsidy programme for domestic solar panel manufacturers in 2015 and 2016, respectively, India took the US over Washington’s allegedly trade-restrictive measures by hiking professional visa fees and over domestic content requirements by several of its states in the energy sector.

While India claimed it has abided by the WTO rulings on poultry import and subsidy programme for solar panels, the US has disputed this threatening to impose trade retaliatory measures. India, on its part, has sought setting up of compliance panels to determine whether India has abided by the WTO rulings or not.

Developed countries have recently expressed displeasure at India’s decision to hike import duties on high-end mobile phones and other electronic equipments, holding that it violates India’s commitment under the Information Technology Agreement signed in 1997. However, India has maintained that it cannot be forced to commit for technological innovations that were non-existent while it signed the deal. “We believe we have a strong case. We will fight it out if some country drags us to the dispute settlement body,” the commerce ministry official mentioned earlier said.

The Trump administration has time and again insisted that India is resorting to discriminatory trade practices, which have led to a large trade deficit for the US. However, India has been insisting that it conducts its trade policy in a non-discriminatory and transparent manner. Last week, Trump criticized India for imposing high import duty on the iconic Harley-Davidson motorcycles and threatened to increase the import tariff on “thousands and thousands” of Indian motorcycles to the US.

During a discussion with members of the Congress on the steel industry, Trump said the recent decision of the Indian government to reduce the tariff from 75% to 50% was not enough and asked that it should be reciprocal, as the US imposes “zero tax” on the import of Indian motorcycles.

A second commerce ministry official, speaking on the condition of anonymity, said India hardly exports any motorcycles to the US and Harley-Davidson, though its Indian factory is doing good business and exporting to other markets. “The US is a strategic partner and our relationship goes beyond short-term tensions in trade. We would like to resolve all issues with the US sitting across the table rather than fighting out at the WTO,” he added.livemint