A senior Indian official has stated that India will retaliate against the European Union (EU) if the trade bloc invokes its domestic law to impose retaliatory tariffs on India. The tensions arose following a recent World Trade Organization (WTO) ruling against India over the imposition of import duties on information communications technology (ICT) products. The EU’s domestic law allows for retaliation if any country appeals to the void. However, India believes this violates WTO principles as it does not conform with the rules of the global trade body. If the EU invokes domestic law, India can inform the WTO and take counter-retaliatory action by imposing tariffs on EU imports. The official added that retaliations would ultimately harm trade on both sides.
On April 17, a WTO panel ruled in favor of three complainant nations, including the EU, that India had violated global trading norms over its imposition of import duties on ICT products such as mobile phone components and telephone handsets. The panel asked New Delhi to eliminate tariffs on technology products. An EU spokesperson had warned of retaliatory tariffs on Indian goods if New Delhi did not comply with the ruling. India’s immediate response was to appeal against the judgment. However, the commerce department stated that India was taking necessary steps and exploring options available in light of its WTO rights and obligations. The panel’s report is not expected to impact India’s ICT products immediately.
The EU had also proposed resolving the matter through a multi-party interim appeal arbitration (MPIA) arrangement, which India has been against, favoring the restoration of the WTO appellate body instead. The MPIA is an alternative system for resolving WTO disputes that are appealed by a member nation without a functioning appellate body comprising 53 WTO member nations. Government officials believe that the EU has not been significantly affected by the imposition of IT tariffs. The EU’s share of total imports of ICT products into India in 2022 was 3.03%, estimated at $550 million, per data compiled by the commerce department.
