Indian chemical sector, particularly polymers to be exempt from WTO 'sectorals'

01-Oct-08

The government of India is mulling a proposal to ensure that certain sectors in the chemical sector, particularly polymers, are exempted from the World Trade Organisation's (WTO) market-opening provisions called 'sectorals'. 'Sectorals' are intended at mandatory reduction or elimination duties in several sectors, including some infant and vulnerable ones. The US has been exerting pressure on India to make commitments at the WTO to eliminate or drastically cut duties on chemicals, electrical electronics and industrial machinery. Since chemicals would end up as the most affected sector in the event of India agreeing to commit on 'sectorals' negotiations, the government is considering ensuring that there are carve outs on products, especially those in which India has a major domestic production base and where crude oil and naphtha are used as inputs. The 'plan B' is that if India agrees on reducing or eliminating duties on the chemicals industry as a whole, the government would come out with clauses in its customs notification saying that those specific sectors in the chemicals industry where duties would be bound at zero (as per India's commitments at WTO), would be allowed duty-free import of raw materials or intermediates.