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India, US, and WTO Relations



  Sep 13, 2023

India,US and WTO


India's Import Duty Reduction on Food Items

Why is India reducing import duties on certain food items? India has agreed to reduce import duties on some fresh and processed food items as part of a dispute settlement with the United States at the World Trade Organization (WTO). This decision follows negotiations between India and the US.
 

Which food items will have reduced import duties?

The reduced import duties will apply to frozen turkey, frozen duck, fresh/frozen/dried/processed blueberries, and cranberries. Currently, these items attract import duties of around 30-45 percent.
 

How will the import duty reduction work?

The duty reduction will be implemented on a Most Favoured Nation (MFN) basis. This means that while it is the result of negotiations between India and the US, the tariff cut will apply to all WTO member nations, following the WTO's MFN principle.
 

When will the specific import duty reduction be announced?

The product-specific import duty reduction is yet to be announced. However, it is expected that the finance ministry's revenue department will notify the duty cut in less than six months. There is a timeframe of up to 180 days for this decision to be made.
 

What is the rationale behind India's agreement to reduce import duties?

One reason behind this decision is to resolve a trade dispute between India and the US at the WTO related to poultry imports. India had lost this dispute, and the reduction in import duties serves to settle the dispute. Additionally, it allows the US to gain market access for items that may not be very popular in India.
 

How will this tariff reduction impact the domestic market?

The reduction in import duties is unlikely to significantly impact the domestic market. It primarily benefits consumers who prefer international products, particularly in niche segments. The Indian market for these specific items caters to a limited segment of consumers interested in purchasing international products.
 

Who stands to benefit from the import duty reduction?

Hotels, food processors, and consumers, especially high and middle-income consumers and the hospitality sector, are expected to benefit from the reduced import duties on these niche food products.
 

What does Most Favoured Nation (MFN) mean in the context of WTO trade?

In the context of the WTO, Most Favoured Nation (MFN) means that a member country must treat all other WTO member countries equally in terms of trade, offering the same trade advantages and benefits to all without discrimination.


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