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Consider exiting ITA, House panel tells union govt
A parliamentary committee urges India to reconsider its WTO ITA commitments to boost domestic manufacturing and protect national interests.
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A parliamentary committee has urged the Union government to rethink India’s commitments under the World Trade Organisation’s Information Technology Agreement (ITA) to safeguard national interests and revive domestic manufacturing.
Partially blaming the ITA for weakening the country’s electronics industry, the parliamentary standing committee on communications and information technology has urged New Delhi to consider renegotiating, or even exiting, the zero-tariff pact, while striking bold new trade deals, especially with the US.
Pointing to the United States walking away from certain WTO obligations as an example, the committee said, “The committee strongly feel that if USA can come out unilaterally from WTO obligations, India should also see it as an opportunity to further negotiate at WTO for favourable clauses under ITA and may also weigh in the options for an exit. In the current scenario, coming out of ITA seems to be quite plausible and a strong need for FTAs (free trade agreements) is felt at bilateral and multilateral levels between member countries in their mutual national interest.”
The committee made the recommendations in a report, titled “Impact of Information Technology Agreement in the New Age”, submitted to Lok Sabha speaker Om Birla last week. HT has reviewed a copy of the report.
The ITA is a trade deal where member countries agree to make tariffs zero on IT products like computers, semiconductors, and telecom equipment, so they can be traded more freely across the world. The ITA was formed at the WTO Ministerial Conference in Singapore in December 1996. India signed it on 25 March 1997.
The report said India’s ITA experience has been “most discouraging”, as zero tariffs wiped out much of the electronics industry, turning the country into an importer and assembler rather than a manufacturer, with little value addition, jobs, or technology transfer. Because India agreed in 1997 to eliminate tariffs on over 200 IT products, it lost a critical policy tool –– protective tariffs –– that other countries used to build local industries, the committee said.
The IT Ministry told the committee that this has curbed import substitution, thus weakening Narendra Modi government’s self-reliance efforts such as Make in India and atmanirbhar (self-reliant) Bharat.
According to the committee, China has been the biggest gainer of the ITA, capturing about 33% of global exports under the agreement between 1996 and 2015. Other major beneficiaries include South Korea, Taiwan, Singapore, and Vietnam, all of which built strong electronics manufacturing bases before or while joining the agreement.
Additionally, the committee also noted that India’s trade deficit in the IT/Electronics manufacturing sector is also due to inadequate focus and abysmally low investment in R&D and Innovation in the country. India’s R&D spending, approximately between 0.6-0.7% of GDP, is well below that of countries like South Korea, the US, China, and Israel, which spend between 2-5% of GDP.
India is also currently facing WTO disputes with the EU, Japan, and Taipei over tariffs it imposed on certain Information and Communication Technology products, which they argue violate ITA commitments. WTO panel rulings have gone against India, though the government has appealed and is negotiating with some complainants.
The committee recommended that India push for renegotiation of ITA terms at the WTO, seek favourable clauses or special treatment for developing countries, and, if needed, weigh the option of exiting the agreement.
However, the committee also noted that government initiatives have led to an increase in India’s electronics exports and manufacturing over the years. As per latest government data, production of electronic goods has increased from ₹1.9 lakh crore in 2014-15 to 11.3 lakh crore in 2024-25. Within the same period, export of electronic goods has increased eight times, mobile manufacturing units have gone up from two to 300 units, production of mobile phones has gone up from 0.18 lakh crore to 5.5 lakh crore, and export of mobile phone has increased 127 times.
In 2014-15, imports met 75% of India’s mobile phone demand. Today, that share has dropped to just 0.02%, according to government data. The committee noted that India’s current value addition in the electronics sector stands between 18-20%, but the government’s objective is to bring it to 35-40%.
Officials at the IT ministry could not be reached for a comment.
