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WTO and Impact on India

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" WTO and Impact on India "

One of the primary objectives of the WTO was to substantially reduce the distortions that have plagued global agricultural markets, caused primarily through subsidies and protection by the developed countries.

Most of MBA exams test your general awareness either in exam or in GD so it is important for MBA aspirants to update GK at regular intervals. 

Today, you will read General Awareness Topic :  WTO and Impact on India 

The World Trade Organization (WTO) is a global international organization dealing with the rules of trade between nations. The work of WTO moves around WTO agreements, negotiated and signed by the bulk of the world's trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business. 

India is a founder member of the General Agreement on Tariffs and Trade (GATT) 1947 and its successor, the World Trade Organization (WTO), which came into effect on 1 January 2012 after the conclusion of the Uruguay Round (UR) of Multilateral Trade Negotiations. India's participation in an increasingly rule based system in the governance of international trade is to ensure more stability and predictability, which ultimately would lead to more trade and prosperity. 
 
Impact on India
 
Services exports account for 40% of India's total exports of goods and services. The contribution of Services to India's GDP is more than 55%. The sector (domestic and exports) provides employment to around 142 million people, comprising 28% of the work force of the country. India's exports are mainly in the IT and IT enabled sectors, Travel and Transport, and Financial sectors. The main destinations are the US (33%), the EU (15%) and other developed countries. India has an obvious interest in the liberalisation of services trade and wants commercially meaningful access to be provided by the developed countries. Since the Uruguay Round, India has autonomously liberalised its Services trade regime across the board.
 
India's interest in services lies in the large pool of trained, qualified experienced manpower providing services by temporarily moving to provide services and then returning to India (Mode 4). Trade in Mode 4 accounts for only a minuscule 1% of global trade at the moment. India has asked for a commitment from the developed countries in Mode 4, inter alia in I.T and I.T Enabled Services, Engineering Services, Health Services, Education Services etc.
 
The other manner in which India can deliver services is by way of remote supply of services with improved connectivity and vast pool of professionals in various services sectors (Mode 1). It includes outsourcing, BPO etc. Global trade in Mode 1 accounts for only 18% of total global trade. The major concern for India in the area of services is that the markets for services in the larger economies are not sufficiently open, particularly in respect of labour and labour-related services. Furthermore, in order to realise effective access in the larger markets, there is a need to ensure that predictable and transparent disciplines are put in place for Domestic Regulations so that they are not abused to deny access or to create barriers.
 
One of the primary objectives of the WTO was to substantially reduce the distortions that have plagued global agricultural markets, caused primarily through subsidies and protection by the developed countries. Discussions in WTO are aimed at reducing subsidies in developed countries and protection in developing countries. Although the negotiations in the Doha Round made a serious attempt to reduce farm subsidies, little progress has been made towards this end in real terms. Besides reductions in the high levels of farm subsidies, developing countries seeking market access have been seeking reductions in tariffs on agricultural commodities. The focus of the market access negotiations in agriculture has been on reduction in non-ad valorem tariffs that have been used in good measure by a number of developed countries. 
 
Protection of intellectual property rights (patents, copyrights, trademarks etc.) has been made stringent. It is argued that the TRIPs (Trade related Intellectual Property Rights) agreement goes against the Indian Patents Act, 1970. Only process patents can be granted in food, chemicals and medicines under the Indian Patents Act. TRIPs agreement provides for granting product patents also. Under TRIPs patents can be granted to methods of agriculture and horticulture, bio-technological process including living organism like plants and animals. The duration of patents under TRIPs is 20 years. Introduction of product patents in India will lead to hike in drug prices by the MNCs who have the product patent. This will hit the poor people who will not have the generic option open .
 
The extension of intellectual property right to agriculture has negative effects on India. Presently, plant breeding and seed production are largely, in the public domain. Indian scientists have undertaken plant breeding and multiplication is in the hands of National and State Seed Corporations. Government, through this machinery, provides seed to Indian farmers at very low prices. Indian scientists, in future will find it extremely difficult to breed new varieties and Indian research institutions will be unable to compete financially with MNCs and will be denied access to patented genetic material. MNCs will get the control over our genetic resources and as such the control over food production would be jeopardised.
 
The most important things for India to address are speed up internal reforms in building up world-class infrastructure like roads, ports and electricity supply. India should also focus on original knowledge generation in important fields like Pharmaceutical molecules, textiles, IT high end products, processed food, installation of cold chain and agricultural logistics to tap opportunities of globalization under WTO regime. India's ranking in recent Global Competitiveness report is not very encouraging due to infrastructure problems, poor governance, poor legal system and poor market access provided by India. Our tariffs are still high compared to Developed countries and there will be pressure to reduce them further and faster.
 
India has solid strength, at least for medium term (5-7 years) in services sector primarily in IT sector, which should be tapped and further strengthened.
 
India would do well to reorganize its Protective Agricultural policy in name of rural poverty and Food security and try to capitalize on globalization of agriculture markets. It should rather focus on Textile industry modernization and developing international Marketing muscle and expertise, developing of Brand India image, use its traditional arts and designs intelligently to give competitive edge, capitalize on drug sector opportunities, and develop selective engineering sector industries like automobiles & forgings & castings, processed foods industry and the high end outsourcing services.
 
It wont be a bad idea if Indian textile and garment Industry go multinational setting their foot in western Europe, North Africa, Mexico and other such strategically located areas for large US and European markets.
 
Therefore, India must improve legal and administrative infrastructure, improve trade facilitation through cutting down bureaucracy and delays. Corruption will also have to be checked by bringing in fast remedial public grievance system, legal system and information dissemination by using e-governance. 
 
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