This research is an effort to understand the impact of WTO on Indian economy. The big question laid down in this research is how to draw an effective policy line and its implementation. To achieve this it will require an extensive scrutiny into the tools and strategies in use and an analysis of the emerging trends, the need of innovative thinking to develop a model code for India – WTO interface.
The roots of newly emerging forces of globalization exist in specific economic and political development in the late 1980s and early1990s. From other regulatory measures to correct the prevailing distortions in the Indian economy, government of India introduced Structural Adjustment Programmes (SAPs) in July 1991. The World Trade Organization (WTO) which came into existence on January 1, 1995 with a view to ensure global cooperative trade environment, to raise incomes and to create ample job opportunity for the nations through fair and open trade. In order to estimate growth of Indian exports as well as Gross Domestic Product (GDP) for the period 1985-86 to 2010-11 keeping view the structural reform of 1991 and WTO Settlement in 1995, we have employed OLS technique based on dummy variables. The empirical evidences of the present paper has scanned Gross Domestic Product and export performance of the Indian economy for the period 1985-86 to 2010-11 with an attempt to isolate the impacts of Economic reforms and WTO.
The Indian economy has experienced a major transformation during the decade of the 1990s. Apart from the impact of various unilateral economic reforms undertaken since 1991, the economy also had to reorient itself to the changing multilateral trade discipline within the newly written GATT/WTO framework. The unilateral trade policy measures have encompassed exchange-rate policy, foreign investment, external borrowing, import licensing, custom tariffs, and export subsidies. The multilateral aspect of India’s WTO commitments regarding trade in goods and services, trade-related investment measures, and intellectual property rights. The present study analyzes the economic effects on India and other major trading countries/regions of the Uruguay Round (UR) trade liberalization and the liberalization that might be undertaken in a new WTO negotiating round. India’s welfare gain is expected to be 1.1% ($9.2 billion over its 2010 GDP) when the UR scenarios get fully implemented. The additional welfare gain is an estimated 2.7% ($11.4 billion) when the assumed future WTO round of multilateral trade liberalization is achieved. Resources would be allocated in India to the labor-intensive sectors such as textiles, clothing, leather and leather products, and food, beverages, and tobacco. These sectors would also experience growth in output and exports. Real returns to both labor and capital would increase in the economy.
The scale effect (percent change in output per firm) is positive for all the ten sectors of manufacturing, indicating that Indian firms become more efficient than before. Finally, even if India undertakes unilateral trade liberalization of the order indicated in the WTO multilateral scenarios, it would still benefit, although less so than with multilateral liberalization.
India is known to be defensive in the area of agricultural negotiations at the WTO. However, there are areas where India can be offensive as it has significant cost advantage. Horticultural sector is one such area. The proposed study intends to assess the potential impact of Doha Round on Indian horticultural trade. Study will be conducted for select horticultural products and with respect to the US and European markets. A relatively unrestricted, data determined, econometric modelling approach based on the error correction mechanism (ECM) will be used. Though the study is to assess the impact of Doha Round, it will help India understand its negotiating position better by looking at one of the offensive interests it has in agriculture, as the conclusion of the Doha Round is unlikely to happen soon.