Parliamentary panel says India must renegotiate or exit from IT Agreement under WTO, cites US

A parliamentary committee has said India should consider the US' unilateral exit from WTO obligations and its use of tariffs to protect domestic industry as an opportunity to negotiate favourable terms under the plurilateral Information Technology Agreement (ITA) or even explore an exit from it. The Standing Committee on Communications and Information Technology, in a report, blamed the 1997 agreement India signed for several issues affecting the IT and electronics sector, including a large trade deficit and making Indian manufacturers uncompetitive compared to advanced economies.

The Committee described India's experience with the ITA as "most discouraging," stating it "almost wiped out the IT/Electronics industry" in India, while recognising benefits to consumers through lower costs and better access to technology. Though the Ministry of Electronics and Information Technology told the Committee that India cannot unilaterally withdraw from the ITA as a WTO member, the panel cited the US example to suggest such a move seems "quite plausible" now.

Led by BJP MP Nishikant Dubey, the Committee called for free trade agreements at bilateral and multilateral levels among member countries in their mutual national interest. The Committee noted that the US's unilateral imposition of 50 per cent tariffs on India and increased tariffs on other countries presents both challenges and opportunities. It urged India to adopt a proactive and well-calibrated approach towards the ITA amid the rapidly changing world trade order.

The report was adopted last week and submitted to the Lok Sabha Speaker. Parliament is expected to take it up in the next session.

The Committee recommended forming a high-level empowered inter-ministerial committee including ministries of Electronics & Information Technology, External Affairs, Commerce and Industry, Finance, and other stakeholders to examine ITA 1.0 and ITA 2.0, their implications, and suggest a way forward considering the changing global economic order and alliances.

The draft report said the Committee strongly feels that if the US can exit WTO obligations unilaterally, India should also see it as an opportunity to negotiate favourable clauses under the ITA or consider exiting. The ministry stated that when India joined the ITA, its electronics sector was underdeveloped, and tariff removal exposed it prematurely to global competition, hindering growth.

The Committee criticised India's 1997 ITA commitments for eliminating tariffs on a wide range of IT and electronics products without sufficient caution. It said India's legally binding zero-tariff policy on ICT products under the WTO has limited the country's autonomy in regulatory and policy matters.

The Committee highlighted the absence of an exit clause in ITA 1.0, making it difficult for India to renegotiate or withdraw from tariff commitments.