India Faces WTO Scrutiny as EU Chief Calls for Rethinking Global Trade Order

As global trade undergoes significant shifts, India is preparing for a critical Trade Policy Review (TPR) at the World Trade Organization (WTO), even as cracks in the existing multilateral framework become more visible. In a parallel development, the European Union's top leadership has sparked fresh debate by suggesting the need for an alternative to the WTO, raising questions about the future of the institution that has long served as the backbone of international trade governance.

India’s readiness for the review, set against this backdrop of geopolitical and economic tension, signals not only a test of its trade record but also an opportunity to assert its growing weight in shaping global trade norms.

📘 Understanding the WTO Trade Policy Review

The Trade Policy Review Mechanism (TPRM) is a core function of the WTO, designed to ensure transparency and accountability among its members. Countries undergo periodic assessments of their trade and economic policies, with major economies like India subject to review every six years.

India’s upcoming review is part of this cycle and is expected to highlight its:

• Trade reforms

• Export performance

• Tariff structures

• Investment policies

• Trade facilitation measures

It also offers a platform for member nations to ask questions, seek clarifications, and voice concerns over market access, trade barriers, and regulatory practices.

🇮🇳 India’s Trade Landscape: The Good and the Challenging

India enters the review at a time when its trade dynamics have been evolving rapidly. On the positive side, the country has:

• Significantly improved its Ease of Doing Business indicators

• Implemented several customs digitization and port facilitation reforms

• Launched initiatives like PLI (Production-Linked Incentive) schemes to boost exports and manufacturing

• Expanded FTAs (Free Trade Agreements) with nations like Australia and the UAE

However, challenges persist:

• High tariff rates on some agricultural and industrial goods

• Alleged non-tariff barriers

• Complex sanitary and phytosanitary measures

• Frequent export bans or restrictions, particularly on food items like wheat and rice

• A sometimes-protectionist stance in key sectors like e-commerce, data localization, and pharmaceuticals

WTO members are expected to scrutinize these issues during the review, with some seeking greater openness and consistency in India’s trade regime.

🌍 Global Context: EU’s Call for Reform or Replacement?

Even as India prepares for scrutiny, EU Commission President Ursula von der Leyen has called for a rethinking of global trade governance, questioning the WTO’s ability to function effectively in today’s fragmented geopolitical climate.

The call stems from multiple concerns:

• WTO’s dispute resolution mechanism has been crippled due to the U.S. blocking appointments to the Appellate Body.

• The organization has struggled to reform decision-making processes, often hampered by consensus-based rules.

• Key issues like climate-linked trade, digital economy norms, and state subsidies remain unresolved or outdated in WTO frameworks.

In recent speeches, von der Leyen has hinted at building a more agile, rules-based coalition of like-minded economies, signaling a shift toward "WTO-plus" arrangements that could bypass the slow-moving multilateral process.

🔄 India’s Response to Multilateral Flux

India has traditionally defended the principles of multilateralism, albeit with reservations about the WTO’s ability to represent developing country interests. New Delhi has consistently argued for:

• Special and Differential Treatment (S&DT) for developing nations

• Protection of policy space in areas like agriculture subsidies and public stockholding

• Resistance to WTO’s encroachment into non-trade issues, like labor or climate standards

While India has pushed for WTO reform, it has also been pragmatic—walking out of RCEP, the world’s largest trade bloc, in 2019 over concerns related to domestic industry, and embracing bilateral trade deals with key partners in recent years.

India is unlikely to support any formal breakaway from the WTO but could be open to plurilateral agreements, especially on emerging sectors like e-commerce or sustainability, provided its concerns are addressed.

📈 Trade in Numbers: India’s Growing Global Footprint

India’s trade profile has shifted notably over the last decade:

• Merchandise exports crossed $770 billion in 2023–24

• Services exports, particularly IT and consulting, are surging, contributing over 40% of total exports

• The country has moved up the value chain, with rising exports in electronics, pharmaceuticals, and chemicals

• FDI inflows remain robust, particularly in tech, manufacturing, and infrastructure

Despite these gains, India faces a significant trade deficit, especially with China. Managing this imbalance while sustaining high growth remains a central policy concern.

🧩 Key Themes Likely to Emerge in the WTO Review

1. Tariff Rationalization: WTO members may question India’s relatively high average applied tariffs, particularly in agriculture and autos.

2. Export Restrictions: Frequent export curbs on commodities like wheat, rice, and sugar could come under scrutiny.

3. Subsidy Transparency: Questions around subsidies for agriculture, solar energy, and production-linked incentives are expected.

4. Digital Trade Policies: India’s stance on data localization and digital sovereignty may be challenged, especially by Western economies.

5. Climate and Trade: India may be asked how it aligns its trade with sustainability and decarbonization goals.

🤝 Diplomacy at Play

India’s delegation, led by senior officials from the Ministry of Commerce, will aim to project a balanced image: one of a fast-growing, reform-focused economy committed to fair trade, but also firm in defending its developmental priorities.

India is expected to highlight:

• Investment in green infrastructure

• Advances in digitization of trade documentation

• Support for small and medium enterprises (SMEs)

• Its proactive role in South-South trade cooperation

The tone of the discussions could also reflect wider geopolitical alignments—whether tensions with the EU, U.S., and China bleed into trade discourse, or whether members prioritize constructive engagement.

🧭 What Lies Ahead?

India’s WTO review is not just a bureaucratic checkpoint—it is a test of its narrative as a rising global economic power, a nation that wants to lead without being pushed into rigid frameworks. With the EU’s statements challenging the WTO’s future, the global trading system appears at a fork in the road.

If new trade alliances emerge outside the WTO’s framework, India will have to navigate them carefully—balancing strategic autonomy, economic growth, and the benefits of rule-based trade.

For now, the Trade Policy Review offers a stage for India to present its evolving trade identity: not isolationist, but cautious; not anti-globalization, but selectively global; not reluctant to change, but unwilling to be rushed.

In a world increasingly driven by regional blocs and strategic realignments, India's WTO review takes on significance beyond trade metrics. It is a moment to assert vision, values, and voice in a system searching for direction. As the EU hints at new alternatives, India must prepare not only to defend its record—but to shape the future of global trade.