The European Union is leveraging its domestic Enforcement Regulation to push India to eliminate import duties on certain information and communication technology (ICT) products. The move comes as the EU seeks alternative measures to address trade disputes stalled at the World Trade Organization (WTO) due to its defunct Appellate Body.
India has until February 10, 2025, to respond to the EU's consultations or face the possibility of unilateral action. The WTO had ruled against India's imposition of tariffs on mobile phones and electronic components in a case filed in 2019. India, which appealed the ruling, had originally levied a 7.5% duty on ICT goods in 2017, later increasing it to 15% and then 20% to boost domestic manufacturing.
"The European Commission will take the received input into account when considering possible proportionate commercial policy measures in response to India's WTO-inconsistent duties, should a mutually satisfactory solution between the EU and India not be found," the EU said.
The dispute was initiated by the EU, Taiwan, and Japan, challenging India's escalating tariffs. In response to the EU's tactics, Indian officials accused the bloc of pressure measures. New Delhi has threatened retaliatory tariffs worth $1.1 billion on EU-origin products in response to extended safeguard duties on its steel exports.
"Since dispute settlement is not there, the EU wants arbitration under its Multi-Party Interim Appeal Arbitration Arrangement and threatens India with unilateral action," an Indian official said, noting that WTO rules prohibit unilateral measures in such disputes.
The EU has proposed the MPIA at the WTO as a stopgap solution for dispute resolution, but India has opposed the arrangement. Meanwhile, both sides are engaged in negotiations for a bilateral free trade agreement, which could influence the resolution of the ICT tariff standoff.
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