India And Wto


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Explanation to an article related to India and WTO and some calculations.

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India And Wto

  1. 1. Group Members: Arslan Husain Khanzada Shumail Ather S@jid Ali AarainClass: BBA 8DSubject: World Trade OrganizationCountry: Republic Of IndiaDate: May 2, 2011
  3. 3. INTRODUCTIONIndia, officially the Republic of India, is biggest country in South Asia. It is the seventh-largest country bygeographical area, the second-most populous country, and the most populous democracy in the world.Bounded by the Indian Ocean on the south, the Arabian Sea on the west, and the Bay of Bengal on the east,India has a coastline of 7,517 kilometers (4,700 mi). It is bordered by Pakistan to the west; Peoples Republicof China, Nepal, and Bhutan to the north; and Bangladesh and Myanmar to the east. India is in the vicinity ofSri Lanka, the Maldives, and Indonesia in the Indian Ocean.Home to the Indus Valley Civilization and a region of historic trade routes and vast empires, the Indiansubcontinent was identified with its commercial and cultural wealth for much of its long history. Four majorreligions, Hinduism, Buddhism, Jainism and Sikhism originated here, while Zoroastrianism, Judaism,Christianity and Islam arrived in the first millennium CE and shaped the regions diverse culture. Graduallyannexed by the British East India Company from the early eighteenth century and colonized by the UnitedKingdom from the mid-nineteenth century, India became an independent nation in 1947 after a struggle forindependence that was marked by widespread non-violent resistance.India is a republic consisting of 28 states and seven union territories with a parliamentary system ofdemocracy. It has the worlds twelfth largest economy at market exchange rates and the fourth largest inpurchasing power. Economic reforms since 1991 have transformed it into one of the fastest growingeconomies however, it still suffers from high levels of poverty, illiteracy, disease, and malnutrition. Apluralistic, multilingual, and multiethnic society, India is also home to a diversity of wildlife in a variety ofprotected habitats.INDIA AND THE WORLD TRADE ORGANIZATIONIndia played an important part in establishment of GATT and then in establishment of WTO. In 1947 it was itbecame the member of GATT and started to play its part in GATT. And now it’s an active member of WTO,the replacement of GATT, which came into effect on 1st January 1995 in Uruguay Round. India is in very favorof governance of international trade which is based on international rules and regulations. India stronglybelieves that trade lead to prosperity and the trade based on rules and regulations will lead to goodpredictability.It believes that trade will not only benefit its economy but it will also benefit all 134 members of WTO. Allcountries will enjoy MFN status as India’s economy and receive and provide national treatment to all themultinational and national organizations.3|Page
  4. 4. INDIA’S ECONOMIC & SOCIAL INDICATORSECONOMIC INDICATORS 1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2004-05 2005-06 2006-07 2007-08 2008-09GDP at factor cost: At 9719 16512 42981 132520 515032 1925017 2877701 3282385 3779384 4320892 4933183current prices Rs.Cr.GDP at factor cost: 224786 329825 474131 641921 1083572 1864300 2388768 2616101 2871120 3129717 3339374At constant prices Rs.Cr.Per capita Net 5708 7121 8091 8594 11535 16172 19331 20868 22580 24295 25494National ProductAt constant prices Rs.Gross Domestic 8.4 14.0 15.1 19.9 26.0 24.3 32.1 35.5 36.9 39.1 naCapital FormationAs percentage to GDPat current marketpricesGross domestic 8.6 11.2 14.2 18.5 22.8 23.7 31.7 34.2 35.7 37.7 nasavings as percentageto GDP (at currentmarket prices)Index of agricultural 46.2 68.8 85.9 102.1 148.4 165.7 177.3 191.9 200.7 207.1 188.7production (Base:triennium ending1981-82)Index of industrial 7.9 15.6 28.1 43.1 91.6 162.6 204.8 221.5 247.1 268.0 274.3production(Base:1993-94=100)Wholesale Price Index 6.8 7.9 14.3 36.8 73.7 155.7 187.3 195.6 206.2 215.8 234.0average(Base1993-94=100)Consumer Price Index 17.0 21.0 38.0 81.0 193.0 444.0 520.0 542.0 125 133 145for Industrial WorkersAverage (Base1982=100)OUTPUTFoodgrains (million 50.8 82.0 108.4 129.6 176.4 196.8 198.4 208.6 217.3 230.8 229.9tons)Finished Steele 1.0 2.4 4.6 6.8 13.5 31.2 41.3 44.4 50.2 53.3 53.5(million tones)Cement (million tons) 2.7 8.0 14.3 18.6 48.8 99.2 125.3 140.5 154.7 167.6 181.4Coal and lignite 32.3 55.2 76.3 119.0 225.5 332.6 413.0 437.1 462.1 491.1 na(million tons)Crude oil (million 0.3 0.5 6.8 10.5 32.2 32.4 34.0 32.2 34.0 34.1 33.5tons)Electricity generated 5 17 56 111 264 499 587 617 663 704 724(utilities only) (BillionKWH)Plan outlay (Rs. Crore) 260 1117 2524 15023 58369 185737 193114 247178 244230 292336 375486 (Source: Economic Survey 2009-2010)SOCIAL INDICATORS 1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2004-05 2005- 2006-07 2007- 2008- 06 08 09Population (Million) 359.0 434.0 541.0 679.0 839.0 1019 1089 1106 1122 1138 1154Birth Rate (per 1000) 39.9 41.7 36.9 33.9 29.5 25.4 23.8 23.5 23.1 na naDeath Rate (per 1000) 27.4 22.8 14.9 12.5 9.8 8.4 7.6 7.5 7.4 na naLife Expectancy at 32.1 41.3 45.6 50.4 58.7 62.5 na na 63.5 na naBirth (in Years) (a) Male 32.5 41.9 46.4 50.9 58.6 61.6 na na 62.6 na na (b) Female 31.7 40.6 44.7 50.0 59.0 63.3 na na 64.2 na naEducation: Literacy 18.3 28.3 34.4 43.6 52.2 64.8 na 67.6 na na naRate (%) (a) Male 27.2 40.4 46.0 56.4 64.1 75.3 na na na na na (b) Female 8.9 15.4 22.0 29.8 39.3 53.7 na na na na na4|Page
  5. 5. Health & Family 61.8 83.7 151.1 268.7 393.6 577.1 660.8 na na na naWelfare RMP st(Thousand) on 31DecRMP per 10,000 1.7 1.9 2.8 3.9 4.7 5.6 6.0 na na na napopulationBeds (All Types) Per 3.2 5.7 6.4 8.3 9.5 na na na na na na10,000 (Source: Economic Survey 2009-2010)IMPORTS & EXPORT TREND OF INDIAExports and imports are in increasing trend. According to Ministry of Commerce & Industry India the exportswere around $303.696 Billion in 2009 and imports are around $185.295 Billion. There was around 21%increase in exports and around 13.68% increase in imports as compare to year 2008. India Imoprts And Exports 488.991 500 450 414 400 350 312 303.696 300 252 251 250 196 186 185.295 200 163 142 149 126 150 114 112 103 95 84 78 100 51 44 61 53 64 50 0 FY 2002 FY2003 FY2004 FY 2005 FY2006 FY 2007 FY 2008 FY 2009 Imports Exports Total (Source: Economic Survey 2009-2010)5|Page
  6. 6. ARTICLE SUMMARY RELATED TO INDIA AND WTO In the context of Pakistan-India bilateral relations and the bilateral dialogue, India seems to hold most of the cards; the only cards that Pakistan holds are trade and transit.In this article we learned that although this is true that granting MFN is the obligation to all the members butthere is an escape clause as well. This clause permits the individual members to suspend application onnational security grounds. This thought has never been challenged or tested the dispute settlement systemof WTO/GATT. If and when any member feels offended or compelled WTO can utmost authorize theaggrieved member to suspend or withdraw trade benefits of comparable value from the offending member!As India is one of the largest importers, the import of consumer articles from India may be needed inemergency situations. The delivery is apparent in either or the situation, price and freight advantage oradvantage of early delivery. If India is been granted MFN status, Pakistan would lose all control. Thereforethe result would be drastic increase in trade imbalances for India in future years. Whereas, if the Indianimports’ doors could be open, it does not seem to be a nice idea for dealing with trade imbalances. India hasa diversified industrial base and has vast cost and price advantage.India extends subsidies to its agriculture as well as industries in all sorts of subtle ways that we can neitherfollow nor afford. And India will not hesitate to employ dumping, if it can get away with it, to destroy ournascent industries and secure a dominant position in our market. Already some of our industries are reelingunder the chill wind of cheaper Chinese imports. Some sectors of our industry (such as light engineeringgoods, automobiles, pharmaceuticals, ceramic tiles and sanitary-ware) may be particularly vulnerable in theface of unrestricted and uncontrolled flood of cheaper imports from India.If Pakistan continue to withhold the MFN status from INDIA through its lack of enthusiasm about SAARC andSAFTA, Pakistan has strengthened India’s hand in their bilateral relations, and that they must not use theselevers (which evidently annoys India without hurting it) if they want forward movement on India’s part inresolving the long-standing problem of Kashmir.”I do not find much merit in the argument that India is pressing ahead with SAFTA and promoting yet another regional grouping, BIMSTEC (whatever it means),and Pakistan will lose out and stand isolated in the end if it does not (grant MFN status to India and) enthusiastically join in the frantic race for the completion of these regional relationships.” (Khwaja Mohammad Hamid)India has a predominant position in South Asia in all respects and there is no getting away from the realitythat it is bound to dominate, manipulate and exploit any South Asian regional arrangement to its ownadvantage. The principal markets lie in the Middle East, Europe, North America and the Far East. That iswhere most of the potential for the growth of our trade lies and where we should concentrate our energiesand efforts.It should not be a surprise to anybody; however, that immediately behind the question of MFN status toIndia lays the even bigger question, in economic as well as geo-political terms, of the passage of India’s tradewith Afghanistan and with the Central Asian countries through Pakistan. In the context of its regional andglobal ambitions as an emerging great power, India desperately needs this access.6|Page
  7. 7. Conclusion Of The Article:We concluded that India should not be forced to seek a close economic and political relationship with Iran inthe interest of acquiring a passage route to these countries. If and when India succeeds in getting MFNstatus from Pakistan, it will employ all its economic, political and diplomatic resources to the utmost toobtain transit through Pakistan. People assume India’s objective is to devastate the road transportinfrastructure of Pakistan. In fact India wants to increase trade relations with Pakistan and further more withAfghanistan and countries of Central Asia.7|Page
  8. 8. TRADE INDICATORS AND INDICESThese indicators are used to identify and analyze a country’s character and pattern of trade with its partners.With the help of figures and formulas these indicators can show the real position of a countries trade withthe entire world. These indicators can also be very useful in calculating the intra industry trade and it is alsohelpful to analyze country’s growth and their interdependence on each other. Some indicators that weselected to analyze the Indian industry and trade are as follows…Trade Intensity Index:This indicator indicates that how much two countries are trading with each other and what is the importanceof these countries in the world. For our analysis we selected China, as it’s a fastest growing economy andwould be next super power, Pakistan, because Pakistan and India are always considered as competitors toeach other, Sir Lanka, because India had a great stake in economy of India and Bangladesh, which is also aneighbor county of India.India & China Trade Index:In 2009 the total exports of India to China were $ 9354 million and the total exports of India were $ 185295million. The total imports of china were 1.01 trillion and total imports of India were $ 303696 million.According to the formula given… ( ) ( ) Where TIC is trade index between India and ChinaIndia & Pakistan Trade Index:Total export of India to Pakistan = 1440, the total imports of Pakistan were $ 28922.4 million ( ) ( ) Where TIP is trade index between India and Pakistan8|Page
  9. 9. India & Sri Lanka Trade Index:Total export of India to Sri Lanka = 2426, the total imports of Sri Lanka were $ 9600 million ( ) ( ) Where TIS is trade index between India and Sri LankaIndia & Bangladesh Trade Index: ( ) ( ) Where TIC is trade index between India and BengladeshRelative Growth Rate Of Merchandise Exports And ImportsThis index is used to compare rates of growth of exports and imports with those of the world. This indexactually tells us that are there is a real growth or decrease in imports and exports of the country.Relative Growth In Trade of Raw Cotton:The traded volume of raw cotton in 2009 was $ 623 Million and in 2001 it was $ 49 Million. Now puttingthese values in the formula… ( ) [( ) ] ( ) % Where Grc is growth in trade of Raw Cotton9|Page
  10. 10. Relative Growth In Trade of Iron Ore:Total traded volume of iron ore in 2009 was $ 4724 Million and in 2001 it was $ 358 Million. Calculations… ( ) [( ) ] ( ) Where Gio is growth in trade of Iron OreRelative Growth In Trade Of Rice:Total traded volume of iron ore in 2009 was $ 2428 Million and in 2001 it was $ 644 Million. Calculations… ( ) [( ) ] ( ) Where Gr is growth in trade of RiceRelative Growth In Trade Of Fish And Fish Preparations:The traded volume of fish and fish preparations in 2009 was $ 1536 Million and in 2001 it was $ 1394 Million.Now putting these values in the formula… ( ) [( ) ] ( ) Where Gf is growth in fish and fish preparations10 | P a g e
  11. 11. Relative Comparative Advantage IndexIt measures the potential of exports in a country. It explain that if the country in using its trade potential in aproduct of industry or not? The relevant measure for India is as follows…We selected Indian textile industry for this analysis. The total export of textile industry of India is $ 22130million and the total export of India is 163132. And the total world exports are around $ 15.78 trillion in 2008and the share of textile was 345 billion. Now putting all these values in the given formula… ( ) ( ) Where RCAit is Indian textile industry revealed comparative advantage indexTrade Complementary Index:It measures the similarity of one country with the other country. The Pakistan exports of petroleum productswere $ 378.5 million and the imports of India of petroleum products were 79645. So the remainingcalculations are as follows… (| |)It shows that India and Pakistan has very much similarity between their imports and exports. Both aredeveloping countries having major trade shear of agricultural goods. Both are not oil producing countries sothat is why they import huge amount of petroleum products and use them to run their economy.11 | P a g e