The Information Technology Agreement and the ‘Make-in-India’ Initiative

Abstract

The World Trade Organization’s Information Technology Agreement (ITA), which was concluded at the Singapore Ministerial Conference in 1996, is considered to be one of the biggest tariff-cutting deals by virtue of eliminating all customs-related duties on the exportation of certain categories of information technology products to a country, which is a member to the Agreement. Over time, new innovations in the information and communication technology (ICT) sector mandated the consideration of expanding the list of products covered by this Agreement, which took place in the form of ITA-II negotiations. India, which was an original member of the ITA-I, however, decided to opt-out of the negotiations to expand the list of products covered by the Agreement, and reasoned its absence by stating that the zero-tariff regime created by the ITA-I debilitated its electronics-manufacturing sectors and on the contrary resulted in an over-reliance on imported electronic inputs. Accordingly, providing duty-free treatment to a further list of IT products could potentially be detrimental for the country’s economic growth. Consequently, it preferred to give priority to its national policy initiative, namely the ‘Make-in-India’ programme, which embarks upon fostering domestic production of, inter alia, the ICT sector. This article accordingly weighs the better alternative for India and analyses the prospects of initiatives like the current one to resuscitate the ailing domestic electronics-manufacturing sector, before it can benefit from the zero-tariff regime over the expanding list of products covered by the ITA-II.

JEL: K33, M15