WTO urges India to cut trade-restrictive measures reliance, New Delhi flags global non-tariff barriers

The World Trade Organization (WTO) Secretariat's recent urging of India to reduce its reliance on trade-restrictive measures comes at a critical juncture in India's economic trajectory, just ahead of the country's 8th Trade Policy Review (TPR) — a mandatory, periodic evaluation mechanism under the WTO's Marrakesh Agreement of 1994. The TPR mechanism, established under Annex 3 of the Marrakesh Agreement, requires major trading nations like India to undergo comprehensive reviews every four years, with the last one conducted in 2020. This review serves as a transparency tool, allowing member countries to scrutinize each other's trade policies and practices, ensuring adherence to WTO principles such as non-discrimination (Most-Favoured-Nation and National Treatment), predictability, and progressive liberalization. The WTO Secretariat's concerns center on India's continued use of high bound and applied tariffs — India's average applied Most-Favoured-Nation (MFN) tariff remains among the highest in the G20 at approximately 18.3% as of 2023 — along with frequent resort to import licensing, quantitative restrictions, and export controls on sensitive commodities like wheat, rice, sugar, and onions. These measures, often justified under GATT Article XX (General Exceptions) or Article XI:2 (critical shortages), have drawn criticism for lacking transparency and predictability. The Secretariat has emphasized that such policies increase the cost of doing business, deter foreign direct investment (FDI), and undermine India's own 'Make in India' and Production Linked Incentive (PLI) schemes by raising input costs for domestic manufacturers. India, in its characteristic diplomatic assertiveness, has countered by highlighting the proliferation of non-tariff barriers (NTBs) by developed economies — particularly sanitary and phytosanitary (SPS) measures, technical barriers to trade (TBT), and carbon border adjustment mechanisms (CBAM) like the EU's Carbon Border Adjustment Mechanism. New Delhi argues that these NTBs, often disguised as regulatory standards, disproportionately affect developing countries' exports and violate the spirit of Special and Differential Treatment (S&DT) enshrined in the WTO agreements. India has also pointed to the collapse of the Appellate Body since 2019 due to U.S. blocking of appointments, which has paralyzed dispute settlement and weakened the rules-based order. Constitutionally, India's trade policy falls under the Union List (Entry 41: "Trade and commerce with foreign countries") and is governed by the Foreign Trade (Development and Regulation) Act, 1992, which empowers the Central Government to regulate imports and exports through the Foreign Trade Policy (FTP). The Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry implements these policies. However, frequent policy reversals — such as the sudden imposition of export bans on wheat (May 2022) and non-basmati rice (July 2023) — have raised concerns about policy credibility. The significance for India is multifold: while protective tariffs shield nascent industries and ensure food security (a sovereign imperative under Article 21 and Directive Principle Article 47), over-reliance risks retaliatory measures, exclusion from global value chains (GVCs), and erosion of investor confidence. With India aiming for a $5 trillion economy and deeper integration via FTAs (e.g., India-UAE CEPA, India-Australia ECTA), balancing strategic autonomy with WTO compliance is crucial. The ongoing reform of the WTO — including fisheries subsidies (Agreement at MC12, 2022), e-commerce moratorium, and dispute settlement restoration — will shape the multilateral landscape. India must leverage its demographic dividend and digital public infrastructure (like UPI, ONDC) to enhance competitiveness, rather than relying on tariff walls. The 8th TPR will be a litmus test of India's commitment to a rules-based, transparent, and inclusive global trading system — one where it can be both a rule-taker and a rule-maker.