The World Trade Organisation (WTO) has set up a panel to examine whether India’s
auto policy breaks WTO rules and distorts international trade, as contended by
the European Commission (EC) and US, say local sources (5/12/00).

India failed to persuade its two major trading partners from setting up the
panel, despite strong protests from India’s ambassador to the WTO, S Narayanan,
at the WTO Dispute Settlement Body (DSB) meeting in Geneva on October 23.

During a DSB meeting, called on October 15 to consider measures affecting the
Indian industry, Mr Narayanan said that his country’s measures were not inconsistent
with its obligations under Article 4 of the Trade-Related Investment Measures
(TRIMs) Agreement, whereby all developing countries are given a transitional
five-year period to eliminate all TRIMs maintained by them for balance of payments
(BOP) reasons.

Sources say that India has allowed imports of SKD/CKD kits/components under
its auto policy that is looking to attract foreign direct investment in the
market.

Those foreign auto firms who are keen to establish themselves in India have
to maintain foreign exchange neutrality over the entire period of memorandum
of understanding signed between them and the Director-General of Foreign Trade
(DGFT).