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The Make in India initiative was launched by Prime Minister Narendra Modi in 2014. The goal of Make in India is to make India a global manufacturing hub.
The program provides incentives for foreign companies to manufacture goods in India, such as tax breaks, streamlined regulations, and access to land and labor.
Make in India has been successful in attracting foreign investment to India. In the first five years of the program, India attracted over $600 billion in foreign investment. This investment has helped to create jobs and to boost the Indian economy.
However, Make in India has also been criticized for being protectionist. Some critics argue that the program discriminates against foreign companies by providing preferential treatment to Indian companies.
They also argue that Make in India could lead to a decrease in trade between India and other countries.
The WTO has rules that prohibit countries from discriminating against foreign companies. These rules are designed to ensure that all countries have equal access to the markets of other countries.
However, some critics argue that Make in India violates these rules because it provides preferential treatment to Indian companies.
The WTO has not yet ruled on whether Make in India violates its rules. However, if the WTO finds that Make in India is in violation of its rules, India could face sanctions.
Why WTO is Worried from Make in India?
The concerns about Make in India can be divided into three categories: trade, prices, and the environment.
- Trade
One of the main concerns about Make in India is that it could lead to a decrease in trade between India and other countries.
This is because the program provides incentives for foreign companies to manufacture goods in India, which could lead to those companies exporting fewer goods from their home countries.
This could hurt the economies of those countries and could lead to job losses.
For example, the United States has accused India of violating WTO rules by providing preferential treatment to Indian companies in the solar panel industry.
The United States has filed a complaint with the WTO, and the case is currently being investigated.
2. Prices
Another concern about Make in India is that it could lead to an increase in prices for consumers.
This is because the program could lead to a decrease in competition in the Indian market, which could allow companies to charge higher prices for their goods.
For example, the European Union has accused India of violating WTO rules by providing subsidies to Indian companies in the automobile industry.
The European Union has filed a complaint with the WTO, and the case is currently being investigated.
3. Environment
Make in India has also been criticized for its environmental impact. The program has been accused of encouraging the use of polluting technologies and of contributing to deforestation.
For example, the United Nations Environment Programme has criticized India for its plans to build a new coal-fired power plant in the state of Chhattisgarh.
The plant is expected to emit millions of tons of carbon dioxide per year, and it is likely to contribute to climate change.
Implications for the World Trade Organization
The Make in India initiative could have implications for the future of the World Trade Organization.
If the WTO finds that Make in India violates its rules, it could set a precedent for other countries to adopt similar protectionist measures. This could lead to a decrease in trade and investment, which could harm the global economy.
The WTO will need to carefully consider the implications of Make in India before making a ruling.
If the WTO finds that Make in India is in violation of its rules, it will need to develop new rules to prevent other countries from adopting similar protectionist measures.
What are Some Recent Actions taken by WTO in the Same Case?
In 2022, the WTO’s dispute settlement body (DSB) adopted a report finding that India had violated WTO rules by imposing import duties on solar cells and modules from the United States.
The report found that India’s duties were inconsistent with the WTO’s Agreement on Safeguards, which allows countries to impose temporary import restrictions to protect domestic industries from surges in imports.
The United States had filed a complaint with the WTO in 2017, arguing that India’s duties were discriminatory and were not necessary to protect the domestic solar industry.
The WTO’s panel agreed with the United States, finding that India’s duties were “not justified under the Agreement on Safeguards.”
The WTO’s DSB adopted the panel’s report on February 14, 2022. India has 60 days to comply with the report’s recommendations.
If India does not comply, the United States could request that the WTO authorize it to impose retaliatory trade measures against India.
The WTO’s decision in this case is a significant victory for the United States and could have implications for other countries that are considering imposing protectionist measures.
The decision sends a clear message that the WTO will not tolerate discriminatory trade measures that violate its rules.
The WTO’s decision is also a setback for India, which had argued that its duties were necessary to protect the domestic solar industry. The decision could make it more difficult for India to attract foreign investment in the solar sector.
The WTO’s decision is a reminder that the organization is still capable of resolving trade disputes. The decision is a victory for the rule of law and could help to prevent a trade war between the United States and India.
Conclusion
The Make in India initiative has been successful in attracting foreign investment to India.
However, the program has also been criticized for being protectionist and for violating World Trade Organization rules. The WTO has not yet ruled on whether Make in India violates its rules.
However, if the WTO finds that Make in India is in violation of its rules, India could face sanctions.
The success of Make in India in the long term will depend on a number of factors, including competition from other countries, rising wages in India, and the need to address environmental concerns.
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