WTO and Indian Industry

By S. S. Bhandare

Summary

In this Forum of Free Enterprise booklet, the economist S. S. Bhandare, a consultant with Tata Services, surveys the World Trade Organisation and what it means for Indian industry, drawing on a presentation he gave at an FFE programme in January 2001. He sketches the WTO’s origins as successor to GATT and third pillar of the Bretton Woods system, its membership of 138 countries covering some 95 per cent of world trade, and its formally democratic one-member-one-vote structure - while noting that in practice the ‘Quad’ countries (USA, EU, Canada, Japan) dominate decision-making because developing countries lack cohesion. Against the backdrop of accelerating globalisation, Bhandare lays out the WTO’s strategic framework and mandate across goods, services, TRIMs, TRIPs, dispute settlement and anti-dumping rules.

The booklet then turns to the specific areas of concern for Indian industry - high manufacturing and transaction costs, technology gaps, infrastructure bottlenecks, politically stalled hard-core reforms like exit policy and privatisation, weak export competitiveness, and ‘neo-protectionism’ in developed-country markets - before examining the controversial fields of intellectual property (TRIPs), anti-dumping, and subsidies. On subsidies Bhandare explains the WTO’s ‘traffic-light’ classification of red, amber and green measures and argues that India must redesign rather than simply scrap its subsidies, distinguishing non-merit subsidies from those that serve genuine developmental objectives.

Key points

• Traces the WTO’s 1995 origin as successor to GATT and third pillar of the Bretton Woods system alongside the IMF and World Bank.

• Notes 138 members covering ~95% of world trade, with formally democratic voting but de facto dominance by the Quad (USA, EU, Canada, Japan).

• Frames Indian industry’s challenges as far more serious than its opportunities given weak competitive strength after a decade of reform.

• Lists concerns: high costs, technology gaps, infrastructure bottlenecks, stalled exit/privatisation policy, and developed-country neo-protectionism.

• Explains the TRIPs agreement’s nine IP categories and India’s concerns over product patents for pharma/agro-chemicals and patenting of life forms.

• Describes the WTO ‘traffic-light’ subsidy system (red/amber/green) and the phase-out of export subsidies like Section 80 HHC by 2003.

• Concludes India should redesign subsidies to be WTO-compatible, protecting merit and developmental subsidies rather than cutting indiscriminately.

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