NEW DELHI, Oct 3: India has decided to defy the American ultimatum on making an acceptable offer by today on phasing out its import restrictions, and to face an investigation in the World Trade Organisation.The decision was taken at a high-level meeting on Wednesday called to decide on India's response to the escalating quantitative restrictions (QRs) row. An investigation into India's so-called QRs regime is now a virtual certainty, considering America's hardline stance. India has the weakest of cases and is widely expected to lose such a case.Sources said combating the consequences of the October 1 decision could divert all Indian energies and assume the proportions that the security issue did at the CTBT talks in Geneva.As early as October 6, the United States may put up the constitution of a dispute-settlement panel on the agenda of the WTO dispute settlement body's (DSB) October 16 meeting. It could be joined by one or more of the complainants who have informed the WTO that India continues to use a precarious balance of payments (BoP) position as an excuse to restrict imports when its BoP is in no danger. India's unprecedentedly high foreign exchange reserves of $ 30 billion strongly support this argument.Alongside America, the other complainants against India are the EU, Canada, Japan, Australia, Norway and Switzerland. That some at least are likely to join the US in seeking a WTO panel was apparent from EU sources telling The Indian Express that ``there is no real difference between the United States and the European Union'' on this one.The outcome of an adverse ruling could be extremely dire for India. ``India is in trouble,'' Indian sources said. Compliance with such a ruling would mean that India would anyway have to dismantle the QRs whose quick phase-out it is now resisting, and possibly much more quickly than its trading partners might have allowed if it had taken a more positive line in consultations through September.Failure to comply would entitle the aggrieved countries either to seek compensation for export losses due to India's closed regime or impose retaliatory sanctions in any sector.Given the wide grouping ranged against India, such sanctions could cripple India's exports. The United States and the EU alone make by far the bulk of its export markets in most commodities. Punitive tariffs in the textiles sector, for instance, could paralyse these exports which make up over a third of total exports.If panel-constitution is put on the agenda on October 6 for the DSB's October 16 meeting, India would have a reprieve of one month if it asked for panel constitution to be delayed. A second request for a panel in November would automatically result in its setting up.The Indian decision is a victory for the Commerce Ministry's stance against the advice of the Finance and External Affairs' Ministries, which have been advocating an amicable resolution. Finance Minister Chidambaram had himself assured US Sceretary of State Madeleine Albright recently in Kuala Lumpur that India would offer an acceptable phaseout schedule.QR removal incidentally does not mean a throwing open of all imports. It merely means replacing QRs with tariffs, several of which can be very high in order to afford protection to ``sensitive'' items.Autonomy for 97 more PSUsPublic sector reforms took another step forward today with the Government granting operational autonomy to 97 profit-making PSUs. The Cabinet has cleared a separate package for these PSU with which they will be in greater control of their targets and performance. This comes about three months after the Government announced a package for the top nine PSUs which have the potential of becoming global giants.The selected PSUs which have been christened mini-ratnas have been selected on the basis of their profit record for the last three years and their net worth. The mini-ratnas have been classified into two catgories, the first group comprising 48 companies has PSUs which have notched up a profit of at least Rs 30 crore in one of the last three years. For the second category Rs 30 crore profitability clause has not been kept as an entry barrier. Some of the mini-ratnas are Oil India, Shipping Corporation, Power Finance Corporation, Neyveli Lignite Corporation, Indian Railway Finance Corporation, Bharat Petroleum, Indian Railways Construction Co, MMTC, STC, Modern Foods, Mazagaon Dock and Balmer Laarie. The mini-ratnas cannot be defaulting on any government loan. In addition these PSUs cannot avail of budgetary support or any kind of government guarantees for raising finance.
