The WTO and India's Trade Agreements
WTO rules decide which export incentives India can offer and which partners get lower duties. Here's what changed and why.
The World Trade Organization sets the rules that every government's trade measures are measured against. Established on 1 January 1995, it has 166 members accounting for 98% of world trade. For a trade finance banker, the WTO is not abstract: it decides which export incentives India can offer, it is why India's trade agreements are allowed to give some countries lower duties than others, and its disputes have changed the schemes your exporters claim.
This page covers the two core principles, the dispute that reshaped Indian export incentives, and the agreements India now trades under.
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The Two Non-Discrimination Rules
- Most-favoured-nation (MFN)
- A member cannot normally discriminate between trading partners. A lower duty granted to one member must be extended to all. It is the first article of GATT.
- National treatment
- Imported and local goods must be treated equally once the imports have entered the market. It appears in GATT Article 3, GATS Article 17 and TRIPS Article 3. Charging customs duty at the border does not breach it.
- The FTA exception
- Members may form free trade agreements that cut duties only inside the group, and may give developing countries special access, but only under strict conditions.
Export Incentives and DS541
Article 3.1(a) of the WTO Agreement on Subsidies and Countervailing Measures (SCM Agreement) prohibits subsidies contingent on export performance. In March 2018 the United States challenged five Indian measures: the EOU/EHTP/BTP schemes, EPCG, SEZ, a set of duty-free import provisions, and MEIS (the Merchandise Exports from India Scheme). The panel report circulated on 31 October 2019 found that most of them conferred prohibited export subsidies. It accepted that exempting or remitting duties and taxes on an exported product is not a subsidy under footnote 1 of the SCM Agreement, but found that the challenged measures went beyond that; MEIS failed because of its entire design.
India appealed on 19 November 2019. On 13 July 2023 India and the US notified a mutually agreed solution, India withdrew the appeal, and the report was never adopted. The policy shift had already happened: MEIS gave way to RoDTEP, which is designed as a remission of taxes borne by the exported product that are not refunded elsewhere, the kind of measure footnote 1 tolerates.
India's Recent Free Trade Agreements
All four cover goods and services. Dates from the WTO's regional trade agreements database, as last updated on 30 September 2026.
India-United Arab Emirates
Signed
18 February 2022
In force
1 May 2022
India-Australia
Signed
2 April 2022
In force
29 December 2022
EFTA-India
Signed
10 March 2024
In force
1 October 2025
United Kingdom-India
Signed
24 July 2025
In force
15 July 2026
| Agreement | Signed | In force |
|---|---|---|
| India-United Arab Emirates | 18 February 2022 | 1 May 2022 |
| India-Australia | 2 April 2022 | 29 December 2022 |
| EFTA-India | 10 March 2024 | 1 October 2025 |
| United Kingdom-India | 24 July 2025 | 15 July 2026 |
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Case: Claiming the Lower Duty
A Coimbatore pump maker exports to Dubai. The UAE importer wants the lower duty under the India-UAE agreement, which in practice means the goods must qualify as Indian-origin under the agreement and the importer needs proof of that origin. The bank sees the certificate as one of the LC documents. If the credit calls for a certificate of origin and the one presented does not show what the credit requires, it is a discrepancy under UCP 600, whatever its value to the buyer's customs.
Shipping to Brazil is different. The WTO database classes MERCOSUR-India (in force since 1 June 2009) as a partial scope agreement covering goods only, so preference depends on whether the product is covered at all.
How the IIBF Exam Tests This
Expect principle questions (which rule says imports must be treated like local goods once inside the market) and impact questions (why India replaced MEIS). The trap is the outcome of DS541: the panel ruled against India, but the report was never adopted because the dispute ended in a mutually agreed solution in 2023. Courseware written before then may describe the appeal as pending.
FAQs
How many members does the WTO have?expand_more
166, accounting for 98% of world trade, according to the WTO. It was established on 1 January 1995.
What is the difference between MFN and national treatment?expand_more
MFN stops a country discriminating between its trading partners. National treatment stops it discriminating between imported and domestic goods once the imports have entered its market.
Why did India replace MEIS with RoDTEP?expand_more
MEIS was among the measures a WTO panel in DS541 found to be prohibited export subsidies. RoDTEP, which took its place, is designed as a remission of embedded taxes on exported products, the kind of measure WTO rules allow under conditions.
Is the India-UK trade agreement in force?expand_more
Yes. The WTO's RTA database records it as signed on 24 July 2025 and in force from 15 July 2026.
Next steps
- Trade Theoriesarrow_forward
- Services Exportsarrow_forward
- RoDTEP Schemearrow_forward
- Syllabusarrow_forward
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