World TradeIMPACT OF THE World Trade Organisation ON THE INDIAN ECONOMYINTRODUCTION:The World Trade organization wasestabl...
World TradeUNFAVOURABLE IMPACT:1) TRIPsProtection of intellectual property rights has been one of the major concerns of th...
World Tradeall products originating from least developed countries.India will have to now bear the adverse effect of compe...
Upcoming SlideShare
Loading in …5
×

Impact of the world trade organisation on the indian economy

90,016 views

Published on

Published in: Education
1 Comment
47 Likes
Statistics
Notes
  • Can you plz mail dis presentation to me..itz vry imp..
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
No Downloads
Views
Total views
90,016
On SlideShare
0
From Embeds
0
Number of Embeds
80
Actions
Shares
0
Downloads
0
Comments
1
Likes
47
Embeds 0
No embeds

No notes for slide

Impact of the world trade organisation on the indian economy

  1. 1. World TradeIMPACT OF THE World Trade Organisation ON THE INDIAN ECONOMYINTRODUCTION:The World Trade organization wasestablished to deal with all the major aspectsof international trade and it had far reachingeffects not only on India’s foreign trade butalso on its internal economy.The impact of the WTO on the Indianeconomy can be analysed on the basis andgeneral concepts.IMPACT:The WTO has both favourable and non-favourable impact on the Indian economy.FAVOURABLE IMPACT:1) Increase in export earnings:Increase in export earnings can be viewed from growth in merchandise exports and growthin service exports:• Growth in merchandise exports:The establishment of the WTO has increased the exports of developing countries because ofreduction in tariff and non-tariff trade barriers. India’s merchandise exports have increasedfrom 32 billion us $ (1995) to 185 billion u $ (2008-09).• Growth in service exports:The WTO introduced the GATS (general Agreement on Trade in Services) that provedbeneficial for countries like India. India’s service exports increased from 5 billion us $ (1995)to 102 billion us $ (2008-09) (software services accounted) for 45% of India’s serviceexports)2) Agricultural exports :Reduction of trade barriers and domestic subsidies raise the price of agricultural products ininternational market, India hopes to benefit from this in the form of higher export earningsfrom agriculture3) Textiles and Clothing :The phasing out of the MFA will largely benefit the textiles sector. It will help the developingcountries like India to increase the export of textiles and clothing.4) Foreign Direct Investment:As per the TRIMs agreement, restrictions on foreign investment have been withdrawn bythe member nations of the WTO. This has benefited developing countries by way of foreigndirect investment, euro equities and portfolio investment. In 2008-09, the net foreign directinvestment in India was 35 billion us $.5) Multi-lateral rules and discipline:It is expected that fair trade conditions will be created, due to rules and discipline related topractices like anti-dumping, subsidies and countervailing measure, safeguards and disputesettlements. Such conditions will benefit India in its attempt to globalise its economy. 1 Shashi Prakash, PGDM(ABM), MANAGE
  2. 2. World TradeUNFAVOURABLE IMPACT:1) TRIPsProtection of intellectual property rights has been one of the major concerns of the WTO. Asa member of the WTO, India has to comply with the TRIPs standards.However, the agreement on TRIPs goes against the Indian patent act, 1970, in the followingways:• Pharmaceutical sector :Under the Indian Patent act, 1970, only process patents are granted to chemicals, drugs andmedicines. Thus, a company can legally manufacture once it had the product patent. SoIndian pharmaceutical companies could sell good quality products (medicines) at low prices.However under TRIPs agreement, product patents will also be granted that will raise theprices of medicines, thus keeping them out of reach of the poor people, fortunately, most ofdrugs manufactured in India are off –patents and so will be less affected.• AgricultureSince the agreement on TRIPs extends to agriculture as well; it will have considerableimplications on Indian agriculture. The MNG, with their huge financial resources, may alsotake over seed production and will eventually control food production. Since a largemajority of Indian population depends on agriculture for their livelihood, thesedevelopments will have serious consequences.Micro-organisms: Under TRIPs Agreement, patenting has been extended to micro-organismsas well. These mills largely benefit MNCs and not developing countries like India.2) TRIMS :The Agreement on TRIMs also favours developed nations as there are no rules in theagreement to formulate international rules for controlling business practices of foreigninvestors. Also, complying with the TRIMs agreement will contradict our objective of self –reliant growth based on locally available technology and resources.3) GATS:The Agreement on GATS will also favour the developed nations more. Thus, the rapidlygrowing service sector in India will now have to compete with giant foreign firms. Moreover,since foreign firms are allowed to remit their profits, dividends and royalties to their parentcompany, it will cause foreign exchange burden for India.4) TRADE AND NON – TARIFF Barriers:Reduction of trade and non-tariff barriers has adversely affected the exports of variousdeveloping nations. Various Indian products have been hit by. Non- tariff barriers. Theseinclude textiles, marine products, floriculture, pharmaceuticals, basmati rice, carpets,leather goods etc.5) LDC exports:Many member nations have agreed to provide duty – frce and quota – frce market access to 2 Shashi Prakash, PGDM(ABM), MANAGE
  3. 3. World Tradeall products originating from least developed countries.India will have to now bear the adverse effect of competing with cheap LDC exportsinternationally. Moreover, LDC exports will also come to the Indian market and thuscompete with domestically produced goods.CONCLUSION:Thus the WTO is a powerful body that will enact international laws on various matters.It will also globalise many countries and help them to develop their competitive advantagesand seek benefits from advanced technology of other nations.Though countries like India will face serious problems by complying to the WTO agreements,it can also benefit from it by taking advantage of the changing international environment. X SHASHI PRAKASH PGDM (ABM) 19-12-2012 00:42:08 3 Shashi Prakash, PGDM(ABM), MANAGE

×