By  on June 5, 2007

GENEVA — India's global trading partners are urging the country to take steps to reduce high tariffs on imports of textiles and apparel and to remove other barriers to trade and investment.

India's textile and apparel industry "remains protected by relatively high tariff barriers," said a report from the World Trade Organization.

The report on India's trade practices served as the reference document for a two-day review at the WTO late last month of the world's second-largest emerging market. India has posted an average growth rate of 8.5 percent over the last four years.

"India today is on the threshold of far-reaching reforms which we expect to fundamentally transform the Indian economy," the nation's Commerce Secretary, G.K. Pillai, told delegates.

Pillai noted foreign direct investment has surged in recent years, rising to $16 billion in 2006-2007 from $2.2 billion in 2002-2003. FDI is expected to increase to $25 billion by 2007-2008 and the country's middle class is expected to reach 583 million by 2025, more than double its current estimated size.

However, representatives of major trading powers stressed India's restrictive barriers and protectionist policies in some sectors hampered foreign access.

Peter Allgeier, deputy U.S. Trade Representative, said retail distribution services "remain entirely closed to foreign investment." Allgeier also said the country's manufacturing sector "is being held back by India's complex system of customs duties, additional duties and special additional duties, which itself impedes trade."

According to the WTO report, the average tariff in India's textiles and apparel sector is 12.3 percent, but additional duties increase the average rate to 22.5 percent, substantially higher than the 12.1 percent average the country has for industrial goods.

India, in a written response, said the measures in question "are within its WTO commitments."

Textiles and apparel combined are still India's biggest merchandise export, accounting for more than 17 percent of total shipments. These industries employ 35 million people, making them the largest manufacturing employer. In 2006, India's merchandise exports expanded by 21 percent, to $120 billion, and imports grew by 25 percent, to $174 billion, according to WTO data.

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