India Faces Flak at WTO for Imposing Import Restrictions

India's decision to restrict inbound shipments of certain types of tyres and ban the import of air conditioners containing refrigerants has sparked outrage at the World Trade Organization (WTO), with various countries labelling the measures restrictive and discriminatory.

Almost two years after India imposed these restrictions, the EU stated that only a limited number of licences have been granted to the EU's tyre manufacturers. Taiwan said at a WTO meeting this week that the measure is "restrictive and discriminatory." At the same meeting, Japan criticised India's 2020 decision to ban the import of air conditioners with refrigerants, calling it "superfluous."

Taiwan said the nearly two-year-old tariffs had a negative impact on its exports to India, resulting in a "significant decrease in exports in 2020 and 2021 compared to the same period in 2019."

It also stated that India appears to issue import licences only for tyres that are not manufactured in India, and it questioned how such a measure would be compatible with WTO rules governing quantitative restrictions. "Taiwan urged India to ensure that applications are properly granted, particularly non-automatic licences and that they are not trading restrictive or distortive," said a Geneva-based official familiar with the meeting's details.

According to the official, the EU, Indonesia, the United States, and Thailand have all expressed concern about New Delhi's move.

"Only a limited number of licences have been granted to EU tyre manufacturers, and these licences are themselves limited in duration, quantities, and tyre types," the official explained. According to Indonesia, the policy is incompatible with the principles of non-discrimination and national treatment.

New Delhi reiterated that the non-automatic licencing requirements for tyres are administered in accordance with the rules of the World Trade Organization's agreement on import licencing procedures and that the procedure is fair.

Concerning the import ban on ACs, Japan claimed that it "unreasonably imposes a disruptive element in global supply chains," while India claimed that the measure is in accordance with its Montreal Protocol obligations. "However, Japan stated that this import ban is unnecessary and that these air conditioners are not subject to India's reduction and initial obligation under the Montreal Protocol, nor its domestic regulations," the official said.