ICT goods levy: India to stick to its decision to take Japan to WTO tribunal

Duty on imports from Japan under the Comprehensive Economic Partnership Agreement for smartphone and other ICT products is already zero. However, this is subject to meeting the Rules of Origin conditions

India plans to stick to its decision to take Japan to the appellate tribunal of the World Trade Organization (WTO) in a dispute over the import duty levied by India on a range of information and communication technology (ICT) goods, including mobile phones and their components, sources in the commerce ministry have told Moneycontrol.

Japan had on May 30th expressed disappointment over India's decision to appeal against the ruling of the WTO trade dispute settlement panel on import duties on these products, and had urged India to withdraw its appeal, the Press Trust of India, citing a Geneva-based official, had reported.

The dispute

In 2019, Taiwan, Japan and the European Union (EU) filed a dispute challenging the import duty levied by India on a range of ICT goods including mobile phones and their components, among others. India levies an import duty between 7.5 percent and 20 percent on such goods.

On April 17, the WTO's dispute panel ruled that India's import duties on some ICT goods breached global trade regulations.

India firm on its decision

While the EU and Taiwan decided to have a dialogue with India over the matter, Japan went for adoption of the ruling by the WTO’s dispute panel.

India, in response, filed an appeal against Japan with the WTO’s appellate tribunal, which sent the case into void.

There is currently no appellate tribunal in the WTO to deal with the appeals. The tribunal has been inoperative for two years due to the US hindering the appointment of judges. Till the time the tribunal has members appointed, all appeals are considered an 'appeal into the void’.

The only way forward for withdrawal after an appeal is filed into the WTO tribunal is for both sides to arrive at a mutually agreed solution.

But India does not plan on rescinding its decision. “In any case there is no injury to Japan, as the products under question are already zero rated under the India-Japan trade agreement CEPA,” said one of the sources cited above.

Duty on imports from Japan under the Comprehensive Economic Partnership Agreement for smartphone and other ICT products is already zero. However, this is subject to meeting the Rules of Origin conditions.

“The norms are nonetheless negotiated upon in the WTO, even between countries that already have trade agreements, for two reasons: both countries may either decide to exit the FTA or when there is a difficulty in meeting rules of origin in some cases,” said Ajay Srivastava, former Indian Trade Service officer and founder of New Delhi-based think tank, Global Trade Research Initiative.