India has sought six years to phase out import curbs in tune with its WTO commitments, but the US has objected to this timeframe. Hearing the two sides, a dispute settlement panel of WTO has asked the two countries to settle the issue through mutual understanding.

The interim findings of DSP on a complaint filed by the US was issued here this weekend. India had entered into bilateral agreements regarding the six-year timeframe with five trading partners, including the European Union, on the grounds that it was not possible for New Delhi to lift the curbs earlier due to balance of payments position.

The DSP ruling also provided for arbitration by a designated authority to settle the issue and the final findings are expected to be available in two weeks.

The US had dragged India to the WTO afterbilateral talks to solve the issue failed. Earlier, India had successfully negotiated the six-year phaseout period with Australia, Canada, New Zealand and Japan besides the European Union.

WTO experts feel the issue has gone back to the situation from where the controversy sparked off. "It (import curb row) is back to where it was," an expert, who did not wish to be identified, said.

India came under pressure to dismantle its import curbs, imposed to preserve its foreign exchange reserve, after the International Monetary Fund (IMF) reported that India's balance of payment position was satisfactory.

After the IMF report, India was asked to negotiate with the US and other five trading partners the dismantling of import curbs under the aegis of WTO.

However, the talks failed as India initially sought nine years to remove the import curbs and then decreased the period to seven years. But the industrialised nations, led by the US, did not agree to it and the WTO suggested that a six-year phaseout periodcould be contemplated.

Following this, India entered into bilateral agreement to remove import curbs on goods considered to be significant by the trading partners.

During the DSP hearing, India questioned the IMF finding and asked how its ruling could be brought into the WTO framework. It also argued that it was for the WTO balance of payment committee to decide when a country should remove import restrictions.

Piqued by the pressure exerted by developed nations, India is now spearheading the developing nations cause by asking WTO to clearly specify the guidelines for removing import curbs.It has also said developing nations should first enjoy the economic benefits of global trade before they could agree to fresh round of negotiations scheduled at the WTO ministerial meeting next year-end.