India

“Trade Policy Reviews” analyse the trade policies and practices of each member of the WTO. The reviews consist of three parts: an independent report by the WTO Secretariat, a report by the government, and the concluding remarks by the Chair of the WTO’s Trade Policy Review Body. The opening section - “key trade facts” - provides a visual overview of the WTO member’s major exports/imports, main export destinations, origins for its imports and other key data. This edition looks into the trade practices of India.

“Trade Policy Reviews" analyse the trade policies and practices of each member of the WTO. The reviews consist of three parts: an independent report by the WTO Secretariat, a report by the government, and the concluding remarks by the Chair of the WTO’s Trade Policy Review Body. The opening section - "key trade facts" - provides a visual overview of the WTO member's major exports/imports, main export destinations, origins for its imports and other key data. This edition looks into the trade practices of India.

The Trade Policy Review Mechanism (TPRM) was first established on a trial basis by the GATT CONTRACTING PARTIES in April 1989. The Mechanism became a permanent feature of the World Trade Organization under the Marrakesh Agreement which established the WTO in January 1995.

International trade economists have long been interested in understanding the distributional implications of globalization or trade liberalization or product market competition. One of the crucial aspects of such distributional effects, which have received a lot of attention, especially from the 1990s onward, is how such forces divide the labor pie into skilled (or nonproduction) and unskilled (or production) workers. In other words, does an increase in trade participation or exposure to international markets result in an increase in returns for skilled or less skilled workers?

The contribution of information technology (IT) to India’s GDP increased from 1.2 per cent in 1997 to 9.3 per cent in 2015. A notable characteristic of this phenomenon is that the majority of the growth in this sector is driven by exports. Currently, more than 80 per cent of IT output is exported. This sector is thus very vulnerable to demand shocks in the world economy. Also, unlike the export of most goods, the export of IT services relies exclusively on the Internet, the expansion of which in the 1990s is a relatively recent phenomenon. The combination of worldwide rapid Internet growth along with rising demand for computing skills created an unprecedented demand for Indian IT services: from 1998, IT exports and employment doubled in a span of just two years.

India opened its domestic market to international trade in the early 1990s. The decision had profound implications on the development trajectory of the country. Trade opening allowed the country’s firms to source inputs more cheaply and increase their competitiveness. At the same time, it meant that firms in India were exposed to increased competition from abroad, while consumers enjoyed lower prices for final goods. While the trade opening helped boost economic growth, it required an adjustment of capital and labor within and across sectors.