RESTRICTEDWORLD TRADE
ORGANIZATIONG/SG/Q2/IND/6
7 September 1999
(99-3720)
Committee on Safeguards Original:  English
NOTIFICATION UNDER ARTICLE 12.1(A) OF THE AGREEMENT ON
SAFEGUARDS ON INITIATION OF AN INVESTIGATION
AND THE REASONS FOR IT
Replies to Questions Posed by the UNITED STATES1
Regarding the Notifications of INDIA2
The following communication, dated 3 September 1999, has been received from the
Permanent Mission of India.
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Q.1. Please identify any countries that India excludes from the application of the safeguard
measure on acetylene black, carbon black, prop ylene glycol and slabstock foam, and the reasons
for such exclusions.
Reply
The provisions empowering the Central Government to impose safeguard duties are contained
in Section 8B of the Customs Tariff Act 1975, extracts of which are reproduced as under:  "If the
Central Government after conducting such enquiry as it deems fit, is satisfied that any article is
imported into India in such increased quantities and under such conditions so as to cause or threaten to
cause serious injury to the domestic industry, then, it may, by notifications in the Official Gazette,
impose a safeguard duty on that article.
Provided that no such duty shall be imposed on an article originating from a developing
country so long as the share of imports of that article from that country does not exceed three per cent
or where the article is originating from more than one developing country, then, so long as the
aggregate of the imports from all such countries taken together does not exceed nine per cent of the
total imports of that article into India".
The Ministry of Finance has notified 134 countries as developing countries vide notification
No. 103/98-Cus. dated 14 February 1998.  Further, a notification No. 77/99-Customs dated
25 June 1999 has also been issued by the Department of Revenue of the Government of India making
provisions for exemption from payment of safeguards duty for developing countries specifically  for
individual items where safeguard duty has been imposed.
                                                     
1 G/SG/Q2/IND/5+G/SG/Q2/IND/5/Corr.1
2 G/SG/N/10/IND/1, G/SG/N/10/IND/2, G/SG/N/10/IND/3 and G/SG/N/10/IND/4G/SG/Q2/IND/6
Page 2
Q.2. Is India excluding imports from certai n developing country members from the
safeguard measures, as required by Article 9 of the WTO Agreement on Safeguards?  For each
of the products, identified in paragraph one above , please identify the developing countries that
are being excluded from the measures, pursuant to the suggested format for notifications under
Article 9 footnote 2, which is provided in item V of the annex to G/SG/W/1 (23 February 1995).
According to the information provided in G/SG/N/10/IND/1 (20 January 1999), the
safeguard measure shall not apply to imports of acetylene black made under an Advance
Licence, subject to the condition that the exempt article shall not be disposed of or utilized in
any manner except for utilization in discharge of export obligation or for replenishment of
article so utilized and the article so replenished  shall not be sold or transferred to any other
person.  We further note that the safeguard measures similarly do not apply to imports of
flexible slabstock polyol (G/SG/N/10/IND/4), propylene glycol (G/SG/N/10/IND/3), and carbon
black (G/SG/N/10/IND/2).  We are concerned th at the imposition of a safeguard only to
products not subject to advance licencing could increase any trade-distorting effects of the
licences.
Reply
List of countries excluded from the application of the safeguard measure, commodity wise:
(a) Acetylene Black
Safeguard duties will not be applicable to imports from all developing countries
notified vide Notification No. 103/98-Cus. and Notification No. 62/99-Cus.
excluding:
(i) Peoples Republic of China
(ii) Philippines
(iii) Singapore;  and
(iv) South Africa
(b) Carbon Black
Safeguard duty stands expired on 28 February 1999.
(c) Slab Stock Foam
Safeguard duty will not be applicable to imports from all developing countries
notified vide notification No. 103/98 & 62/99-Cus. excluding:
(i) Singapore
(d) Propylene glycol
Safeguard duties will not be applicable to imports from all developing countries
notified vide Notification No. 103/98-Cus. & 62/99-Cus. excluding:
(i) Singapore.G/SG/Q2/IND/6
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Q.3. Please describe the Advance Licence, a nd the relationship, if any, between the Advance
Licence and Value Based Advance Licences (VABALs).
Reply
Advance Licence is basically a duty exemption certificate issued to the exporters to enable
them to import inputs duty free to be used or already used for the  manufacture of export products.
This is permitted as per the WTO Agreement on Subsidies and Countervailing Measures.  As all
import charges or duties levied on the inputs used for export product are refundable, the system of
advance licences is to ensure that the duties are not paid on such items ab initio .  As safeguard duty is
payable only on imported inputs and hence the imports made under the Advance Licences Scheme are
exempted from payment of safeguard duty.  Va lue based Advance Licences Scheme (VABAL) was
discontinued w.e.f. 1 April 1997.
Q.4. Has the Government of India stopped issu ing “Advance Licences” for acetylene black,
flexible slabstock polyol, propylene glycol and carb on black?  If yes, on what dates were the last
such advance licences issu ed for each product?
Reply
The Government of India has not stopped issuing Advance Licences for Acetylene Black,
Flexible Slabstock Polyol, Propylene Glycol and Carbon Black.
Q.5. What is the rationale for excluding imports pursuant to the Advance Licence from the
application of the safeguard measure?
Reply
The reply has already been given above in the reply to Question 3.
Q.6. According to the information provided in G/SG/N/6/IND/1 (7 January 1998), India
imported 11.5 MT of acetylene black in 1993- 1994, 8.3 MT in 1994-1995, 71.0 MT in 1995-1996,
841.06 MT in 1996-1997 and 250.57 MT in 1997-1998 (to Ju ly).  For each of these periods, please
provide the volume, in metric tons, of Acetylen e Black that were imported into India pursuant
to Advance Licence.  As of the date of impositi on of the safeguard measure, what is the amount,
in metric tons, of Acetylene Black that ca n be made pursuant to advance licence?  Please
provide similar data for flexible slabstock polyol, propylene glycol and carbon black.
Reply
Separate data of imports under Advance Licences are not available.
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