GATT & WTO

Its Impact on Indian Foreign Trade

By: Aniruddh Tiwari
Binit Chouraria
Kaushik Basak
Prasad E. Prabhu
Shashank M.A.
Umamaheshwar Rao

Objective & Hypothesis

Objective:
1) To study the benefits of WTO & GATT on
Indian Foreign Trade.
2) Analysis of three sectors namely Agriculture,
Textile & Service.

Hypothesis(H0):
Indian foreign trade unaffected by WTO Policies

Indian foreign trade:

Indian economic policy after independence was influenced by the colonial
experience, which was seen by Indian leaders as exploitative,and by those
leaders' exposure to democratic socialism as well as the progress achieved
by the economy of the Soviet Union.
Domestic policy tended towards protectionism, with a strong emphasis on
import substitution, industrialization, state intervention, a large public
sector, business regulation, and central planning,while trade and foreign
investment policies were relatively liberal.
India's economy was mostly dependent on its large internal market with
external trade accounting for just 20% of the country's GDP.
Until the liberalization of 1991, India was largely and intentionally isolated
from the world markets, to protect its economy and to achieve selfreliance. Foreign trade was subject to import tariffs, export taxes and
quantitative restrictions.

India's exports were stagnant for the first 15 years after independence, due to
the predominance of tea, jute and cotton manufactures, demand for which was
generally inelastic. Imports in the same period consisted predominantly of
machinery, equipment and raw materials, due to nascent industrialization.

Since liberalization, the value of India's international trade has increased sharply.
India's major trading partners are the European Union, China, the United States
and the United Arab Emirates.
In 200910, major export commodities included engineering goods, petroleum
products, chemicals and pharmaceuticals, gems and jewellery, textiles and
garments, agricultural products, iron ore and other minerals. Major import
commodities included crude oil and related products, machinery, electronic goods,
gold and silver.
Its September 2010 exports were reported to have increased 23% year-on-year
to US $18.02bn, while its imports were up 26.1% at $27.14bn. At US$13.06bn
Augusts' trade gap was the highest in 23 months but the economy is well on the
road to cross $200 billion mark in exports for the financial year 201011.

GATT

The General Agreement on Tariffs and Trade (typically

abbreviated GATT) was negotiated during the UN Conference
on Trade and Employment and was the outcome of the failure
of negotiating governments to create the International Trade
Organization (ITO).
GATT was formed in 1948 and lasted until 1993, when it was
replaced by the World Trade Organization in 1995.

GATT and WTO trade rounds

Name

Start

Duration

Countries

Subjects covered

Achievements

Geneva

April 1947

7 months

23

Tariffs

Signing of GATT, 45,000

tariff concessions affecting
$10 billion of trade

Annecy

April 1949

5 months

13

Tariffs

Countries exchanged some

5,000 tariff concessions

Torquay

September
1950

8 months

38

Tariffs

Countries exchanged some

8,700 tariff concessions,
cutting the 1948 tariff
levels by 25%

Geneva
II

January 1956

5 months

26

Tariffs, admission of Japan

$2.5 billion in tariff

reductions

Dillon

September
1960

11 months

26

Tariffs

Tariff concessions worth

$4.9 billion of world trade

Kennedy

Tokyo

Uruguay

Doha

May 1964

September 1973

September 1986

November 2001

37 months

74 months

87 months

Tariff concessions
worth $40 billion of
world trade

62

Tariffs, Anti-dumping

102

Tariffs, non-tariff
Tariff reductions worth
measures, "framework" more than $300 billion
agreements
dollars achieved

123

The round led to the

creation of WTO, and
extended the range of
trade negotiations,
Tariffs, non-tariff
leading to major
measures, rules,
reductions in tariffs
services, intellectual
(about 40%) and
property, dispute
agricultural subsidies,
settlement, textiles,
an agreement to allow
agriculture, creation of full access
WTO, etc
for textiles and clothing
from developing
countries, and an
extension of intellectual
property rights.

141

Tariffs, non-tariff
measures, agriculture,
labor standards,
environment,
competition,
investment,
transparency, patents
etc

The round is not yet

concluded.

WTO:
The World Trade Organization (WTO) is an organization that intends to supervise
and liberalize international trade. The organization officially commenced on January
1, 1995 under the Marrakech Agreement, replacing the General Agreement on
Tariffs and Trade (GATT), which commenced in 1948.
The organization deals with regulation of trade between participating countries; it
provides a framework for negotiating and formalizing trade agreements, and a
dispute resolution process aimed at enforcing participants' adherence to WTO
agreements which are signed by representatives of member governments and
ratified by their parliaments.
The WTO has 153 members representing more than 97% of total world trade and
30 observers, most seeking membership. The WTO is governed by a ministerial
conference, meeting every two years; a general council, which implements the
conference's policy decisions and is responsible for day-to-day administration; and
a director-general, who is appointed by the ministerial conference. The WTO's
headquarters is at the Centre William Rappard, Geneva, Switzerland.

INDIA AND WTO:

India is one of the founding members of WTO along with 134 other countries.
India's participation in an increasingly rule based system in governance of
International trade, would ultimately lead to better prosperity for the nation.
Various trade disputes of India with other nations have been settled through
WTO.

India has also played an important part in the effective formulation of major
trade policies. By being a member of WTO several countries are now trading with
India, thus giving a boost to production, employment, standard of living and an
opportunity to maximize the use of the world resources.
According to the WTO Secretariat Report, along with the policy statement by the
Government of India, India is expected to snatch most of the business deals that
are presently catering the developed nations which includes major service based
industries like telecom, financial services, infrastructure services such as transport
and power.
The increase in availability and reduction in tariffs has prompted many developed
nations to go for business with India especially in IT and ITeS industry. If the
trend continues then by 2025, India is expected to cater to the software and
services demands of major giants of the business world.

Indias ImpEx Before Liberalization

Year to

Exports(Rs in million)
(including re-exports)

Imports(Rs in million)

1949-50

485

617

1950-51

606

1951-52

Trade Balance

Rate of Exchange
Export

Import

-132

na

na

608

-2

24.9

-1.5

716

890

-174

18.2

46.4

1952-53

578

702

-124

-19.3

-21.1

1953-54

531

610

-79

-8.1

-13.1

1954-55

593

700

-107

11.7

14.8

1955-56

609

774

-165

2.7

10.6

1956-57

605

841

-236

-0.7

8.7

1957-58

561

1035

-474

-7.3

23.1

1958-59

581

906

-325

3.6

-12.5

1959-60

640

961

-321

10.2

6.1

1960-61

642

1122

-480

0.3

16.8

1961-62

660

1090

-430

2.8

-2.9

1962-63

685

1131

-446

3.8

3.8

1963-64

793

1223

-430

15.8

8.1

1964-65

816

1349

-533

2.9

10.3

1965-66

810

1409

-599

-0.7

4.4

1966-67

1157

2078

-921

42.8

47.5

1967-68

1199

2008

-809

3.6

-3.4

1968-69

1358

1909

-551

13.3

-4.9

1969-70

1413

1582

-169

4.1

-17.1

1970-71

1535

1634

-99

8.6

3.3

1971-72

1608

1825

-217

4.8

11.7

1971-72

1608

1825

-217

4.8

11.7

1972-73

1971

1867

104

22.6

2.3

1973-74

2523

2955

-432

28

58.3

1974-75

3329

4519

-1190

31.9

52.9

1975-76

4036

5265

-1229

21.2

16.5

1976-77

5142

5074

68

27.4

-3.6

1977-78

5408

6020

-612

5.2

18.6

1978-79

5726

6811

-1085

5.9

13.1

1979-80

6418

9143

-2725

12.1

34.2

1980-81

6711

12549

-5838

4.6

37.3

1981-82

7806

13608

-5802

16.3

8.4

1982-83

8803

14293

-5490

12.8

5.0

1983-84

9771

15831

-6060

11

10.8

1984-85

11744

17134

-5390

20.2

8.2

1985-86

10895

19658

-8763

-7.2

14.7

1986-87

12452

20096

-7644

14.3

2.2

1987-88

15674

22244

-6570

25.9

10.7

1988-89

20232

28235

-8003

29.1

26.9

1989-90

27658

35328

-7670

36.7

25.1

1990-91

32553

43198

-10645

17.7

22.3

1991-92

44041

47851

-3810

35.3

10.8

1989-90

1949-50
1951-52
1953-54
1955-56
1957-58
1959-60
1961-62
1963-64
1965-66
1967-68
1969-70
1971-72
1973-74
1975-76
1977-78
1979-80
1981-82
1983-84
1985-86
1987-88

Exports

35000

30000

25000

20000

15000

10000

5000
Exports

Imports
50000
40000

Imports, 43198

30000

20000
10000
0
Imports

Imports 96-97

Imports in 2009-10

Exports in 1996-97

Exports in 2009-10

EXPORT OF PRIMARY PRODUCTS IN

96-97

TOTAL: Quantity 7551913.8 mts

Value
7915.12 Crs

EXPORT OF PRIMARY PRODUCTS IN 06-07

TOTAL: Quantity 12099516 mts

Value
21150.4 Crs

Indias Import & Export post reform

Exports
90000000
80000000
70000000
60000000
Axis Title

50000000
40000000
30000000
20000000
10000000
0

96-97

97-98

98-99

99-00

00-01

01-02

02-03

03-04

04-05

05-06

06-07

07-08

08-09

09-10

Misc

491786.8 542339.9 634678.4 760504.7 1059732 1298387 1458327 1641057 2102620 2291527 2936350 2881001 4635817 5145480

Heavy Machinery

1020479 1105266 1068740 1164457 1725802 1838017 2183550 2923169 3688139 4993196 6402877 7715493 1315179511503451

Metals & Minerals

2501785 2854353 3382247 4449691 5015199 5104759 6745573 7873023 106980561171765814416988154736492157145520550895

Clothings

3377284 3581165 3936673 4451564 5428601 5113270 5885493 6367888 6649403 8161378 9155048 9444544 1037309711642364

Animal products

421799.7 480361.8 513899.1 480811.4 664479.8 660121.3 668932.7 742848.2 790823.3 857798.9 925515 955183.2 1119179 1041673

Silk

43655.6 65145.69 71,269.5 93,106.8 129,057. 119,470. 131,757. 156,617. 164,802. 173,742. 175,312. 139,386. 152,205. 131,922.

Books

15177.13 13401.56 19,072.9 21,732.3 27,725.0 26,428.8 32,751.9 43,161.0 46,798.7 63,304.1 114,637. 80,241.0 103,287. 96,190.8

Pharmaceutical Products

238563.9 290071.6 307,016. 370,893. 431,767. 503,510. 677,911. 744,452. 926,341. 1,082,12 1,438,02 1,671,16 2,337,93 2,456,62

Chemicals & Fertilizers

1278728 1381286 1296788 1488770 2801145 3040993 4003845 4901120 8062470 1130831715619851197971572185771223541455

Agriculture

1620932. 1713561. 1830246 1614840 1746625 1924899 2203363 2362842 2595746 2855848 3555954 4955973 5790702 5209213

Forest produce (inc paper) 302982.7 278919.4 306218.9 329928.7 403318.4 431101.4 568470.5 643361.6 727188.6 906797.9 1061449 1049879 1305277 1236233
Dairy Products

11760.11 11676.87 9,320.23 11,761.3 20,815.8 35,248.3 35,670.2 40,970.8 73,586.8 110,677. 80,739.9 138,739. 154,242. 91,470.0

Meat & Fish

556863.7 610223 599146.7 718116.5 902834.7 805590.5 918082.2 896163.9 1007977 1119418 1295180 1283942 1522802 1906390

Imports
160000000
140000000
120000000

Axis Title

100000000
80000000
60000000
40000000
20000000
0

96-97

97-98

98-99

99-00

00-01

01-02

02-03

03-04

04-05

05-06

06-07

07-08

08-09

09-10

Misc

1332359 1305645 1909798 1288421 1240788 1342513 1557509 1695868 2336424 3298797 4285852 4903597 7119393 8353609

Heavy Machinery

2606570 2798193 2844808 3167283 3594954 4093160 5854089 7686343 103019771534642319291048263657412971295627399160

Metals & Minerals

2676229 3716564 4918830 5585666 5523520 5790809 6476033 8456905 123960371382341316520186182951772887502330184264

Clothings

187396.4 224371.4 283312.3 401916.6 442888.3 594962.2 618071.3 718012.1 778700.3 935612.3 1024550 1082960 1364188 1374673

Animal products

122529.6 127132 119895.6 121204.7 141697.8 176273.9 198721.1 222627.4 242667.6 266310 318932.5 339937.9 383124.4 356197.5

Silk

29,717.1 28,350.7 32,967.6 47,978.4 56,795.7 80,653.7 95,041.6 117,336. 144,928. 176,235. 158,589. 158,377. 172,846. 182,042.

Books

30,468.0 55,674.4 71,225.6 62,323.8 88,122.1 108,715. 100,355. 135,556. 165,823. 210,346. 257,205. 279,878. 201,625. 208,192.

Pharmaceutical Products

22,834.2 45,698.9 57,004.1 60,051.1 68,789.8 79,434.9 115,210. 114,987. 130,277. 194,913. 291,382. 281,855. 426,218. 519,663.

Chemicals & Fertilizers

5796032 5774513 5621652 8795789 10234832101545881236369913851797203720942838556737336086448197116337455459511094

Agriculture

309645.2 473690.3 567231.9 508839.6 329967.9 597032.9 654686.2 638426.2 803308.9 925123.5 1655600 1482958 1577401 2740416

Forest produce (inc paper) 466621.8 566385.3 588012.4 639185.4 703485.8 780028.2 762226 1061992 1278007 1441674 1852447 2075746 2580588 2803725
Dairy Products
Meat & Fish

561.45 3,003.25 4,247.51 18,113.0 5,357.54 3,930.78 8,469.22 13,307.4 6,655.47 4,108.05 11,531.4 7,100.17 11,892.0 33,235.3
311003.3 298407.2 814199.6 856072.4 656077.4 717869.9 916476.5 1197607 1149552 1032367 1047221 1138130 1643743 2707283

Consolidated

Exports

96-97

97-98

98-99

99-00

00-01

01-02

02-03

03-04

04-05

05-06

06-07

07-08

Exports
08-09

09-10

96-97
97-98
98-99
99-00
00-01
01-02
02-03
03-04
04-05
05-06
06-07
07-08
08-09
09-10
Exports 11881797 12927770 13975316 15956178 20357101 20901797 25513728 29336675 37533953 45641786 57177929 65586352 84075506 84553364

Consolidated

Imports
Exports

96-97

97-98

98-99

99-00

00-01

01-02

02-03

03-04

04-05

05-06

06-07

07-08

Exports
Imports
08-09

09-10

96-97
97-98
98-99
99-00
00-01
01-02
02-03
03-04
04-05
05-06
06-07
07-08
08-09
09-10
Imports 13891967 15417629 17833185 21552844 23087276 24519972 29720587 35910766 50106454 66040890 84050631101231170137443555136373555
Exports 11881797 12927770 13975316 15956178 20357101 20901797 25513728 29336675 37533953 45641786 57177929 65586352 84075506 84553364

30000000

25000000

20000000

15000000

10000000

5000000

Standard Deviation

Further Work
To project the increase in imports and exports
over the next 10 years
To study the non trade barriers to trade and
its effect on India

Analysis of WTO provisions on three sectors

namely agriculture , textile and services.

References

Dhar, Biswajit and Kallummal, Murali (2007), Non Trade Barriers in Doha Round- Is a Solution In Sight?
Acharyya, Rajat (2006), Trade Liberalization, Poverty and Income Inequality in India
Mehta, Rajesh (2006), Nontrade Barriers Affecting Indias Exports
Singh, S.P. (2004), Post WTO Era: Impact on Export Prospects of Livestock Products
Kathuria, Monika (2010), Doha Round of Multilateral Trade Negotiations- Critical Issues in Trade Development Pertaining to
India
Pathak, Shubhangi (2006), Liberalization of Financial Services Under The WTO
Sachs, Jeffrey D., Bajpai, Nirupam and Ramiah, Ananthi (2001), Understanding Regional Economic Growth in India
Srinivasan, T.N., (2002), Economic Reforms and Global Integration
Goldar, Bishwanath (2005), Impact on India of Tariff and Quantitative Restrictions Under WTO
Gupta, R.K., (2005), WTO and Implications for Indian Economy- A Review
Ministry of Commerce website (http://commerce.nic.in)
Indian Statistical Institute (http://isical.ac.in)
Reserve Bank of India website (http://rbi.org.in)
Miscellaneous sources from the internet