India at the WTO: Punching Above Its Weight

Abstract

India’s negotiating stance at WTO has been a subject of research, amusement and speculation among knowledgeable observers. There is first the impression that India is often “isolated” in multilateral trade negotiations. Second, there is some amusement at the company we keep: for example, the famous Like-Minded Group in which India shared the negotiating stage with the likes of Cuba, Venezuela, Dominican Republic and Pakistan. Last, how could India which received a large amount of Foreign Direct Investment (FDI) possibly object to negotiations in this area at the WTO?The Chapter broadly explains the justification of India’s negotiating stance. For starters, a large part of the population (estimated by some at 300 million) lives in extreme poverty. Any move that would affect them adversely is political suicide for the government in a country like India. The second consideration lies in the area of Agriculture and things like rural distress, farmer suicides etc. are hugely sensitive subjects. Last but not least, the quintessential obsession of India for retaining “policy space”.The mechanics of decision-making in trade policy is covered in some detail. While the Commerce Minister may seem as the ultimate arbiter, it is nevertheless true that the Prime Minister (and his office) has the last word when it comes to final negotiating decisions on sensitive subjects. In the previous coalition era, the Government used the “Group of Ministers” as a mechanism to decide the negotiating stance. With the assumption of office of the new Government led by Prime Minister Modi in 2014, the main vehicle is Cabinet Committee on Economic Affairs whose composition is given in the Annexure.The Permanent Mission of India to the WTO, led by an Ambassador, has only a handful of trade diplomats to service the WTO negotiations. The Trade Policy Division in the Ministry of Commerce is not too big either. But many smaller developing countries do not even have as many negotiators as India does. Developing countries and least developed countries are therefore at a disadvantage vis-a-vis their developed counterparts.The system of consulting with domestic stakeholders has gotten better in India. Chambers of Commerce, Think Tanks and other Non-Governmental Organizations now play a more active role with the Government in the formulation of trade policy.The Chapter makes the point that for a variety of reasons, therefore, India and its negotiating stance may best be described as “sui generis”.