– Dr. Archana Ranka


School of Law, D.A.V.V., Indore


The WTO has stronger implementation power and wider acceptance for the implementation of agreements as compared to GATT. Its principle agreements are: Trade related investment measures and general agreements on trade in services it has brought new opportunities to developing countries-greater access to developed country markets and technology transfer hold out promises improved productivity & higher living standard.

The economic development of any country depends upon sustained growth of productive capacity, supported by saving and investment, huge inflow of foreign direct investment, rising foreign exchange reserve and flourishing capital market. These determinants occupy a very important position in an economic development of a country like India as they add to growth factor that benefits the exporting country immensely. The emergence of WTO in the year 1995 to give a boost to international trade through increased global market competition.



The World Trade Organization (WTO) is the global international organization dealing with rules of trade between nations. At its heart are WTO agreements, negotiated and signed by bulk of world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business, through non discriminating trading system.

At the heart of the system – known as the multilateral trading system- are the WTO’S agreements, negotiated and signed by a large majority of the world’s trading nations, and

ratified in the parliaments, these agreements happen to be the legal ground rules for international commerce. Essentially, they are contracts, guaranteeing member countries important trade rights. Theyalso bind government to keep their trade policies within agreed limits to everybody’s benefits. The WTO has 153 numbers accounting for 95% of world trade and around 30 others are negating member ship.


India is one of the founder members of world trade organization. India has most of its foreign trade with the member countries of WTO. On 5 March 2014, India notified the WTO’s Committee on Safeguards that was initiated on 28 February 2014 as a safeguard investigation on elastomeric filament yarn. In the notification, India said the following:

“All interested parties may make their views known within a period of 30 days from the date of the notice issued by the Director General (Safeguards) i.e. 28 February 2014 to: Any other party to the investigation who wishes to be considered as an interested party may submit its request so as to reach the Director General (Safeguards) on the aforementioned address within 15 days from the date of the aforesaid date of notice of the Director General (Safeguards).”?


The impact of WTO on India’s economy is staged as follows : Positive Impact, Benefits, Advantages, and Gains from WTO.

The Positive impact of WTO on India’s economy can be viewed from the following points :

1) Increase In Export Earnings

Estimates made by World Bank, Organization for Economic Co-operation and Development (OECD) and the GATT Secretariat, shows that the income effects of the implementation of Uruguay Round package will increase in trade merchandise goods. It will thus improve India’s share in world exports.

2) Agricultural Exports

Reduction of trade barriers and domestic subsidies in agriculture willraise international prices of products related to agriculture. India will surely benefit from this in form of higher export earnings from agriculture.

3) Export of Textiles and Clothing

With the phasing out of MFA (Multi – Fibber Arrangement), exports of textiles and clothing will increase and this will be beneficial for India. The developed countries demanded a 15 year period of phasing out of MFA, the developing countries, including India, insisted that it be done in 10 years. The Uruguay Round accepted the demand of the latter.

4) Foreign Investment

India has withdrawn a number ofmeasures against foreign investment, as the commitments made to WTO. As a result of this, foreign investment and FDI has increased over the years. A number of initiatives have been taken to attract FDI in India between 2000 and 2002. In 2009-10, the net FDI in India was US $ 18.8 billion.

3. Negative Impact / Problems I Disadvantages Of WTO on Indian Economy:

1) TRIPs

The Agreement on TRIPs at Uruguay Round weighs heavily in favours of Multinational Corporations and developed countries as they hold a very large number of patents. Agreement on TRIPs will work against India in several ways and will lead to monopoly of patent holding MNCs. As a member of WTO, India has to comply with standards of TRIPs.

The negative impact of agreement on TRIPs on Indian economy can be stated as follows Pharmaceutical Sector:-

Under the Patents Act, 1970, only process patents were granted to chemicals, drugs and medicines. This means an Indian pharmaceutical company only needed to develop and patent a process to produce and sell that drug. Under the agreement on TRIPs, product patents needs to be granted. This will benefit the MNCs and it is feared that they will increase the prices of medicines heavily, keeping them out of reach of poor.

2) Non – Tariff Barriers

Several countries have put up trade barriers and non – tariff barriers following the formation of WTO. This has affected the exports from developing countries. The Union Commerce Ministry has identified 13 different non – tariff barriers put up by 16 countries against India. For ex. MFA (Multi – fibber arrangements) put by USA and European Union is a major barrier for Indian textile exports.

3) Agreement on agriculture (AOA):

The AOA is biased in favours of developed countries. The issue of food security to developing countries is not addressed adequately in AOA. The existence of global surpluses of food grains does not mean that the poor countries can afford to buy. The dependence on necessary item like food grains would affect the Balance of Payment position.

4) Inequality within the structure of WTO:

There is inequalitywithin the structure of WTO because the agreements and amendments are in favours of developed countries. The member countries have to accept all WTO agreements irrespective of their level of economic development.


The trade volume of India was increasing after the WTO implementation, though not at so good rate as compared to world trade. This is due to the new challenges faced by Indian economy as imposed by WTO. For India, the imports and exports have been increased for all the years during pre and post the WTO. The imports remained more than exports for whole of the years during pre and post the WTO, except 1991 and 1993.


Bar Diagram Presentation of Table 2 as above


Import and Export Volume of India Before and After the WTO

Imports and Exports of India : – For India, the imports and exports have been increased for all the years before and after the WTO. The exports remained more than imports for whole of the years before and after the WTO, except 1993 and 1994.

The chain indices of exports (as percentage of GDP) was 220 before the WTO and it is 200 after the WTO which reveals that rate of increase in exports in eleven years have been slides down after the WTO. While the chain index of imports (as percentage of GDP) before the WTO was 115 and after the WTO it is 217, which shows that imports have been increased rapidly after the WTO. It is concluded that after the WTO the trade has been increased but that is totally contributed by increase in imports not exports.

5. India’s foreign trade post and summary of WTO:

India’s foreign trade post-WTO has predicted positive value, meaning that GDP affect the India’s trade but not significantly. Also agriculture sector which remained negative effect even after post WTO. There is pragmatic change in India’s GDP during post WTO.


For micro inference it can be said that WTO has been playing a very important role in India’s foreign trade. It does need further research to see why India has not benefited from the WTO as per expectation while the major speculated beneficiaries of the WTO were the developing countries. As concerned the econometric results, we shall have to wait for some years to have the robust results about the impact ofdifferent variables on international trade. Being a member of the WTO, India enjoys the most-favoured nation status instead ofaccepting the agreements which are against the national interest.


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