What role did the WTO membership (1995) play in India's post-reform globalization strategy?
- AOption (a)
Strengthened balance of payments
- BOption (b)
Deepened India's integration into global trade
- COption (c)
Abolished domestic subsidies completely
- DOption (d)
Encouraged protective tariffs
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Correct answer
Deepened India's integration into global trade
Why this answer is correct
The correct answer is Deepened India's integration into global trade.
Key Points
- India became a member of the World Trade Organization (WTO) on 1 January 1995, marking a significant milestone in its economic globalization strategy.
- The WTO membership facilitated greater market access for Indian goods and services, boosting exports significantly over the years.
- India's participation in the WTO promoted the adoption of multilateral trade agreements, which helped align its policies with global trade norms.
- The membership also encouraged foreign direct investment (FDI) by showcasing India's commitment to a rules-based trading system.
- WTO membership played a critical role in integrating India into global supply chains, particularly in industries like information technology, textiles, and pharmaceuticals.
Additional Information
- World Trade Organization (WTO):
- The WTO is an international body established in 1995 to regulate global trade and ensure a level playing field among nations.
- Its key functions include administering trade agreements, settling disputes, and fostering transparent trade practices.
- Currently, the WTO has 164 member countries, representing over 98% of global trade.
- Multilateral Trade Agreements:
- These agreements involve multiple countries and aim to create uniform rules for global trade.
- Examples include the General Agreement on Tariffs and Trade (GATT) and the Trade-Related Aspects of Intellectual Property Rights (TRIPS).
- India’s Trade Reforms Post-1991:
- The 1991 economic liberalization dismantled import licensing, reduced tariffs, and invited foreign investments.
- WTO membership complemented these reforms, driving higher participation in global trade.
- Impact on Indian Exports:
- Sectors like IT, textiles, and pharmaceuticals witnessed exponential export growth due to improved market access.
- India's export-to-GDP ratio increased from 7.1% in 1995 to over 20% in recent years (source: World Bank).
- Challenges in WTO Membership:
- India faced challenges such as disputes over agricultural subsidies and compliance with intellectual property rights (TRIPS).
- Despite these, WTO membership has been largely beneficial for India's global trade integration.