India’s ICT tariffs caused €600m annual export loss to EU

The WTO ruled that India’s tariffs of up to 20 per cent on certain ICT products, such as mobile phones, were not in line with its WTO commitments and were “illegal”.

| Updated: 19 April, 2023 2:05 pm IST

On EU's appeal, WTO ruled that India's tariffs, as high as 20%, on ICT products were "illegal".

New Delhi: In a major setback to India, the World Trade Organization (WTO) has ruled in favour of the European Union (EU) in a case against India’s tariff on certain information and communication technology (ICT) products.

In its panel ruling, the WTO upheld all EU claims against India and found that India’s tariffs of up to 20 per cent on certain ICT products, such as mobile phones, were not in line with its WTO commitments and were “illegal”.

This affects up to €600 million worth of EU exports to India annually, according to the European Commission.

“While this is already significant, the real impact on European companies, which also export from other countries to India, is considerably higher,” it said.

Since 2014, Prime Minister Narendra Modi’s government introduced customs duties on ICT products such as mobile phones, mobile phone components and accessories, line telephone handsets, base stations, static converters, or electric wires and cables to encourage domestic production.

In its ruling, the WTO said that New Delhi’s tariffs breached its WTO “commitments to apply a zero-duty rate to these products”.

Major European technology companies affected by Indian tariffs include Ericsson, Siemens, Nokia, and Infineon Technologies.

The EU filed a dispute settlement case in the WTO in 2019.

The panel said that India’s tariffs could not be justified by any reasons brought forward in this case. India could not invoke the Information and Technology Agreement (ITA) to escape the commitments made in its WTO schedule, nor limit its zero-duty commitment to products that existed at the time of this commitment and exclude more recent technological products falling under the same tariff line.

The panel also refused to examine India’s request to rectify its tariff commitments, indicating that such changes would need to be negotiated among WTO members.

“The impact on European companies, which also export from other countries to India, is significantly higher,” the commission said.