WORLD TRADE ORGANIZATION
ORGANISATION MONDIALE DU COMMERCE
ORGANIZACIÓN MUNDIAL DEL COMERCIOWT/TPR/M/100/Add.1
1 August 2002
(02-4255)
Trade Policy Review Body
19 and 21 June 2002Original: English/
               anglais/
               inglés
TRADE POLICY REVIEW
INDIA
Minutes of Meeting
Addendum
Chairperson:  H.E. Ms Amina Chawahir Mohamed (Kenya)
This document contains the advance written questions, and replies provided by the delegation
of India.1
__________________________________________________________________________________
Organe d'examen des politiques commerciales
19 et 21 juin 2002
EXAMEN DES POLITIQUES COMMERCIALES
INDE
Compte rendu de la réunion
Addendum
Président:  S.E.  Mme Amina Chawahir Mohamed (Kenya)
Le présent document contient les questions écrites communiquées à l'avance et les réponses
fournies par la délégation indienne.1
__________________________________________________________________________________
Órgano de Examen de las Políticas Comerciales
19 y 21 de junio de 2002
EXAMEN DE LAS POLÍTICAS COMERCIALES
INDIA
Acta de la reunión
Addendum
Presidente:  Excma. Sra. Ami na Chawahir Mohamed (Kenya)
En el presente documento figuran las preguntas presentadas anticipadamente por escrito,
junto con las respuestas facilitadas por la delegación de India.1
                                                     
1 In English only./En anglais seulement./En inglés solamente.WT/TPR/M/100/Add.1
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ADVANCE WRITTEN QUESTIONS BY MEMBERS AND REPLIES PROVIDED BY THE
DELEGATION OF INDIA
SWITZERLAND
FDI (II para. 35 and I, para. 26):
Q.1 India has undertaken a series of liberalization measures in the area of foreign direct
investment.  Despite this, there has been no increas e in FDI inflow so far.  A number of possible
reasons is given in chapter I, para. 26.  In our own experience, reasons quoted by foreign investorsinclude bureaucratic hassles, long list of approvals required to start industrial operations, non-
consistency in certain policies, rigid labour laws, and lack of infrastructure facilities.  What are in the
opinion of the Government of India the main reasons, and what are the concrete plans to address these
additional restraints hampering FDI ?
FDI inflows into India have registered a consistent growth since 1991 and touched US$4.06 billion
during 2001-02.  Going by the present trend, especially taking into account the substantial increase in
FDI inflows into sectors such as telecom, tr ansportation, IT enabled services, electronics and
computer software as also the investment opport unities arising out of the on-going disinvestment
process in the public sector, the Government is optimistic that the FDI inflows would increase
substantially in the coming years.  The Government also has taken several concrete measures toattract FDI, which, inter alia, include higher degree of automaticity in approvals;  further fine tuning
of sectoral policies (for example the new Telecom Policy, the new Auto Policy, etc.);  setting up of
independent regulators in sectors such as telecommunications, hydrocarbons, electricity, ports, etc.;
and putting in place an attractive package of incentives for investment in the infrastructure sector.
These initiatives have contributed to India's image as an attractive investment destination, which is
also reflected in several independent studies such as that of A. T. Kearney, JBIC Survey, EIU Survey,
etc.  The Government has also set up a high-level Committee on ‘Reforming Investment Approval and
Implementation Procedures', which is likely to submit its recommendations soon.
Q.2 For the existing investors, another important hurdle remains:  the 'No Objection' Clause
introduced vide Note 18 dated 14.12.1998 of the Ministry of Commerce and Industry.  This clause
restricts an existing foreign investor to start a new subsidiary/joint venture unless and until a 'no
objection' is obtained from the previous partner in India.  What is the reasoning for maintaining thisclause?
Press Note 18 (1998 Series) provides for a case by case consideration of proposals relating to new
ventures by an existing foreign investor if the said investor already has or had an existing/previous
joint venture (financial and/ or technical) in the same or allied field.  This provision is aimed at
enabling objective assessment of the impact of the new proposal on the existing joint venture from the
point of view of its resident partners, lending inst itutions, retail investors, etc. as also from the
national point of view in terms of quality of invest ment.  The Government takes into account all these
factors while considering grant of approval fo r such new ventures and a 'no objection' from
existing/previous partners is sought only when it is considered necessary.
Q.3 The insurance sector was earlier opened up for foreign investment, allowing a maximum of
26% FDI.  The amount of minimum investment pres cribed for private companies is, however, quite
high (INR 1 billion for general and life insurance and INR 2 billion for reinsurance business).  On the
one hand, it is difficult to find/select Indian partners with big financial resources (for 74%
shareholding) and common long-term business plans, on the other hand, participation in such a bigWT/TPR/M/100/Add.1
Page 4
venture with only 26% shareholding may not be so attractive.  What is the view of the Government of
India regarding this issue ?
As per extant policy, FDI up to 26% is permitted in the insurance sector subject to obtaining a license
from the Insurance Regulatory & Development Authority.  The minimum capitalization norms
prescribed by IRDA are applicable uniformly to al l Indian companies, irrespective of whether there is
any foreign equity participation or not.  The capitalization norms for the sector have been fixed taking
into account the nature of the business.  Many reputed foreign players have evinced interest to set upjoint ventures with Indian partners for undertaking insurance and insurance related activities and
some have already commenced operations.
Tariff rates (III, paras. 2 and 13)
Q.4 There is a considerable gap between bound and applied rates which provides ample scope for
duty increases, as for instance applied in the case of agricultural products recently.  This gap doeslittle to contribute to predictability of the tradin g framework.  Does the Government of India view this
lack of predictability and certainty also as problematic for domestic producers and consumers ?
Tariffs in India are generally being progressively reduced.  The gap between bound and applied rates
provides the Government with some flexibility to adjust the tariff rates to suitable levels.  Any change
in tariff rates including upward revisions are undertaken after duly taking into account interests of allincluding producers and consumers.
Q.5 The proportion of tariff lines bound is around 70%.  Binding of tariff rates are meant to
contribute to predictability;  does the Government of India view it as feasible to substantially increase
the number of bound tariff lines ?
This would be an issue for consideration in relation to the negotiations on market access for non-
industrial products under the Doha Work programme and cannot be commented upon at this stage.
Q.6 Additional duties (III, paras. 18/31/32):  India imposes additional duties as well as special
additional duties to the "standard" rates of duty with a view to correct import-bias of excise duties and
sales taxes.  Given the fact that “standard” rates of duty are relatively high, couldn't it be argued that
the import-bias of excise duties and sales taxes is already compensated ?  What would be the effect in
terms of trade facilitation, increased transparency and reduced complexity in the administrative
handling of imports if the additional duties were abolished ?
The Additional Duty and the Special Additional Duty  are levied in lieu of domestic taxes namely,
excise duty and sales tax which are imposed on all domestic products.  Thus, these duties only attempt
to bring on the same level of tax incidences on imported products as faced by domestic products in
India.  Therefore, phasing out of these duties is neither required nor feasible.
Customs clearance and Import Restrictions
Q.7 A recent advisory report regarding customs administration (III, para. 9) reported continued
delays in customs procedures.  What is the follow-up being given to that report and to suggestions
made to reduce delays ?
In the past few years, a number of steps has been taken  to simplify the tariff structure.  Some of these
measures include (i) reduction in number of slabs of duty rates, (ii) reduction in number of exemptionWT/TPR/M/100/Add.1
Page 5
notifications, and (iii) uniformity in rates of duty in chapters etc.  These measures have considerably
reduced disputes in classification and delays in Customs clearance.
The Department is in the process of establishing the EDI connectivity am ong Customs formations,
which would not only bring about transparency in Customs clearance procedures, but also
uniformity in assessment practice.  However, a num ber of Customs formations in India are still not
under EDI  and efforts are under way  to implement  EDI at all places.
To eliminate delays in various activities undert aken by Customs, a number of procedures has been
simplified.  Some of the  simplification measures undertaken in the recent past  are given  in reply to
Q.90.
Q.8 For some products, entry of imports is possible through certain ports only which delays and
restricts imports:  what is the reason for this measure ? (III, para. 36)
Port restrictions exists for a few items in view of certain considerations.  Import of new and second
hand cars is permitted through specified ports in order that testing and certification etc. can be
carried out at the port, for which facilities may not be available at every port.
Natural rubber is allowed to be imported through Kolkata and Vishakapatnam in order to ensure
better monitoring of quality standards already complied with by domestic producers.  As the major
area of import of natural rubber is from South Ea st Asia, these two ports in eastern India have been
specified.
Imports of Seconds/defectives steel items are a llowed only through customs sea port at Mumbai,
Chennai and Kolkata.  Import consignments of thes e items are to be accompanied by a pre-shipment
certificate containing description of material qual ity, chemical analysis of the material, visual
inspection, thickness and width of the material and the ITC (HS) code no. from any of the inspection
agency as specified in Appendix 28 of the Handbook of  Procedures, Vol. I, 2002-07.  Port restrictions
ensure testing facilities.
Q.9 Before removing quantitative restrictions, the Government of India was fearing to be flooded
by imports.  This seems not to have happened;  in fact, imports into India (and trade in general) are
sluggish and the benefits of liberalization are not really taking place.  In the view of the Government
of India, what are the reasons for stagnation of imports after removing quantitative restrictions? Could
it be that non tariff barriers are preventing an increase of imports (according to an expert, nearly 40per cent of the some 1200 four-digit tariff lines are having non-tariff barriers in India) ?
India has not imposed any Non Tariff Measures.  Standards and other regulations which are
applicable to domestic producers are applicable to imported products also.  Further, the quantum of
imports or exports depends on, and is a conseque nce of, the normal economic factors of demand and
supply, business cycles etc.
Q.10 Licensing requirements for medicines are to be tightened by 1 January 2003.  What are the
concrete measures India will introduce to implement the new requirements - is there an intention to
carry out inspections abroad / will India recognize inspections performed by foreign institutions, and
if yes, under which conditions?  Furthermore, if products to be sold in India have  already a marketing
authorization in Switzerland, will Indian authorities recognize results of the testings performed bySwiss authorities for the approval of pharmaceuticals in Switzerland in order to speed up / facilitate
the licensing procedure in India?WT/TPR/M/100/Add.1
Page 6
For registration of manufacturers and for drug products to be sold in India, documentary
requirements have been prescribed which include copy of the registration/approval certificate issuedby the Ministry of Health/National Regulatory Authority of the foreign country concerned (duly
notarized) as well as a copy of GMP notification as per WHO GMP guidelines and certificate of
pharmaceuticals (GPP) issued by the National Regulatory Authority of the foreign country concerned
in relation to the bulk drugs or formulations or sp ecial products meant for import into India.  A list of
countries where market authorization or import permission for the said drug has been given alongwith a copy of the authorization letter or cancelled if any, or pending should also be given.
Inspections are provided for, but this would be on case-to-case basis depending on the information
supplied.  At present, there is no proposal to re cognize foreign inspectors other than those mentioned
above.
The requirements are indicated in Schedule D I and Schedule DII of the Notification No. GSR 604 (e)
issued on 24 August 2001.  These can be accessed on the website:   mohfw.nic.in
International Standards
Q.11 According to the Secretariat's report, III pa ra. 48, only some 17% of Indian standards have
been harmonized with international standards.  What measures is India taking to increase
compatibility of its standards with international standards?
Since 1990-91, India began the process of harmonization of Indian standards with International
standards and the steps taken in brief are:
(a) The concerned technical committees (i.e. a body of national experts representing all
concerned interests), in BIS identify the areas for harmonization and allot priorities taking
into account trade/technical considerations;
(b) The international standards may be adopted in toto under the dual numbering system of
ISO/IEC if considered appropriate by the t echnical committee with a national foreword;
(c) The international standards may be adapted by BIS as Indian standards where some
parameters may not be totally equivalent to the international standards due to national
requirements and as approved by the technical committee.  The foreword mentions the
equivalence and differences and reasons for the same.
Q.12 In its Government Report, para. 51, India seem s to make a difference between "highest level
of protection for consumers" and "appropriate level of protection".  At what level does India deem
protection to be appropriate? Is it implied that Indi a would want its export destinations to reduce their
level of health protection and/or environmental protection to allow for larger trade volumes – in other
words is it implied that India questions the right of each WTO member to set its level of protection?
Article 2.2 of the SPS Agreement clearly talks of SPS measures to be applied only to the extent
necessary.  There has been discussion in Codex regarding the level of protection.  Citing the SPS
Agreement, the developing countries have mentioned that appropriate levels of protection should be
sought and not highest levels of protection.  Clearly there is no definition as to what is the highest
level of protection.  Therefore, it is possible that this can be arbitrary.  There have been instances
where highest level of protection has been interpreted as that level where contaminant, can bedetected and which has nothing to do with Risk Analysis.WT/TPR/M/100/Add.1
Page 7
India desires that risk analysis establish the appropriate level of protection based on the level of risk.
This has also been accepted in the Working Principles of Risk Analysis formulated by the CodexCommittee on General Principle in April 2002 meeting.  They repeatedly talk about risk management
measures, which are least trade restrictive.
Under Article 3.3 of the SPS Agreement, countries ha ve the right to set their own level of protection,
provided it is scientifically justifiable.  India accepts this position and the Risk assessment  process as
established under Article 5.  But the insistence by some countries for 4 ppb level of aflatoxin inpeanuts is an example where the highest level of protection sought is neither backed by Risk Analysis
nor has any scientific justification.  These have been questioned in Codex meetings by all developing
countries and not only by India.
Subsidies;  Fiscal Position
Q.13 Subsidies in agriculture (IV, para. 22):  Input su bsidies, such as for fertilizers, still seem to be
a major pillar of domestic support for the agricultural sector in India.  Research in agricultural
economics has shown that input subsidies are the least effective instrument to positively influence the
income of farmers while direct payments directly addressing the problem are the most effective.  Does
the Government of India agree with the results of those studies, and that the consequences are over-
use of fertilizers and environmental degradation as well as unwarranted monopolistic rents for thefertilizer producers?
It would not be a correct view that the fertilizer subsidy is ineffective and better results can be
obtained by other means.  The results of studies mentioned therein are in the context of countries
where agricultural operations are undertaken on large scale with economies of scale.  In India,
agriculture activity is carried out mostly at the level of small holder units.  Hence, any increase in
fertilizer prices due to reduced subsidy will affect agricultural production since most farmers simply
do not have sufficient surpluses to absorb the impact.
While it may be true that there is excess use of fertilizer in some parts of the country, the average
fertilizer consumption in India was about 95 kg. nutrient (N+P+K) per hectare in 1999-2000 which is
considerably less than the level prevailing in other developing countries with similar soil and other
conditions.  The consumption in the developed countries is much higher being 375 kg. per hectare in
Japan, 542 kg. per hectare in Netherlands and 379 kg. per hectare in United Kingdom (UK).  Thefertilizer consumption in India, therefore, cannot be treated as excessive.  In any case, side effects of
overuse can be better handled in India through awareness building and training of farmers in modern
agricultural techniques rather than by raising prices of fertilizers.
Q.14 Subsidies and fiscal deficit:  Subsidized energy leading to a deficit at the size of 1% of GDP
in state-owned energy suppliers (summary para. 11), increasing subsidies in fertilizers, etc., contributeto the weak fiscal position (explicit and implicit subsidies were previously estimated at some 14% of
GDP, according to summary, para. 16).  Does the Indian delegation agree that redressing the fiscal
balance is closely linked to expenditure reform including reducing and making more efficient the
subsidy system? (I, para. 5).
Major subsidies in the Central Government Budget is of the order of 1.5% of the GDP.  The Budget
for 2002-03 has emphasized reduction in subsidies to a minimum over the next 3 to 5 years.
Q.15 Government revenue is highly dependent on customs duties, their share being at some 30% of
net revenue (I, para. 5).  Is it feasible to pursue both the objective of reducing the fiscal deficit and toWT/TPR/M/100/Add.1
Page 8
further reduce peak tariffs? What exactly are the planned steps and the sequencing to reach both
objectives?
Yes, it is true that the Government revenue is reli ant to a considerable extent on customs duty for
revenue mobilization and for reducing revenue and fiscal deficit. 
The economy is, however, expected to grow at a s ubstantially higher growth rate during the Tenth
Plan period (2002-07) and both exports and imports are also likely to rise significantly.  A number of
measures have also been undertaken which include review and withdrawal of a large number ofcustoms duty exemptions, widening the base for domestic taxes by rationalizing the excise duty
structure, widening the coverage of service tax from four services in 1994-95 to 51 services in 2002-
03 and widening the base for direct taxes.  As the economy grows greater reliance will be placed on
direct taxes for revenue generation.  All of these measures are expected to contribute to a rise in
Government revenues despite the planned reduction in Customs duties.
Q.16 Reform in Tax Administration:  Introduction of VAT, which could be helpful in simplifying
the custom duty structure, has been postponed (Government Report, para 21).  What are the measures
by the Central Government to ensure timely implementation of this reform ?
The Central Government is closely working with the State Governments with a view to finding
solutions to the outstanding issues so that centralized VAT System can be introduced from1 April 2003.  Please also refer to reply to Q.81
Contingency measures (III, para. 42)
Q.17 India has emerged as a very active user of antidumping measures.  Does India share the
concern of the Swiss Government regarding the syst emic threat to multilateral trading system about
the large and ever rising number of trade remedy cases being initiated worldwide? Does it agree that it
will increasingly also become a problem in the trade relations among developing countries and that
trying to solve the problem on the basis of special treatment for developing countries will not bringrelief to the systemic problem?
In the context of economic liberalization wherein quantitative restrictions have been progressively
removed over the years, India has been increasingly facing the problem of dumping by foreign
exporters.  The process of liberalization would be meaningful only if there is fair trade and a level
playing field between the imported products and the domestic industry.  India has unfortunately been
facing the problem of dumping of goods by foreign exporters at a time when its industry is in a
vulnerable situation of adjusting to a new QR free environment.  To protect the industry from these
unfair trade practices India has per force to take recourse to anti-dumping measures after initiating
and conducting investigations in accordance with the procedure required under the Agreement on
Anti-dumping and GATT 1994.
India shares the concern of Swiss Government regar ding systemic threat to the multilateral trading
system arising from abuse of trade contingency measures.  India is equally concerned at the
consistency of measures taken to comply with DSB recommendations and rulings in disputes relating
to contingency measures.  It may not be out of place to mention that contingency measures applicable
to developing country exports are not disproportionately higher in developing countries as againstsuch measures made applicable by developed countries.  India is further of the view that
operationalizing the special and differential treatment provisions in favour of developing countries
would ameliorate, to a certain extent, the difficulties faced by developing country exports in
developed countries.  This is particularly relevant in respect of countervailing duty measures whereinWT/TPR/M/100/Add.1
Page 9
about 70% of the measures against developing countries have been resorted to by the developed
countries.
CANADA
Government Report WT/TPR/G/100
I. Introduction, para. 3
Q.18 As part of India's EXIM Policy for 2002-2007, India has proposed transport subsidies for
exports of selected agricultural products.  Please specify the levels of subsidies that are expected to be
granted and over what period for each agricultural product included under this provision.
Under the proposed policy for the provision of Transport Subsidies for exports of selected
agricultural products, such subsidies are proposed to defray a part of costs incurred by the exporters
in transporting selected agricultural products in which case the freight constitutes a major componentof the total cost.   These subsidies will be subjected to budget allocation during the period of the
EXIM Policy (2002-2007) and will be reviewed every two or three years.
II. Key Developments in Trade and Economic Policy Since the Last Review, (5) Fiscal
Consolidation, paras 22-23
Q.19 Please explain how the decision to provide frei ght-related subsidies for the export of wheat
and rice from the Food Corporation of India as announced by Commerce Minister Maran in his
speech of March 31 on the 2002-2007 EXIM Policy, would not worsen the government's fiscal
balance.
The Food Corporation of India incurs expenses on the purchase of wheat and rice at the MSP,
transportation, cleaning, processing, storage and distri bution.  Huge losses of food grains take place
during the entire movement chain of handling food grains.  Freight related subsidies for exports will
help in reducing the costs of carrying the stocks  and losses during storage, transportation and
distribution.  Saving in costs will offset the increase in burden on the exchequer.
II. Key Developments in Trade and Economic Policy Since the Last Review, (5) Fiscal
Consolidation, para. 23
Q.20 Please provide clarifications on the schemes that are being implemented for decontrol and
deregulation carried out by States in the agriculture sector.
The State Governments have started removing certain control orders which limits storage within the
State as well as movement of food grains outside that state.  These measures will result in a near
decontrol and deregulation of food grains trade in the country.  In addition, Government of India has
recently removed restrictions on export of food grains, pulses and other agricultural products, except
for onions.WT/TPR/M/100/Add.1
Page 10
II. Key Developments in Trade and Economic Policy Since the Last Review
(6) Reform in Foreign Investment Regime, paras 24-25;  (9) Deregulation of Interest Rates,
para. 28;  and (10) Other Banking Sector Reforms, para. 29
Q.21 Regarding India's ongoing banking reforms and efforts to attract foreign direct investment,
including in the banking sector, why does India not consider a level playing field between domestic
and foreign banks and thus profit from competition-induced efficiencies? We understand, for
example, that effective 1 April 2002, there is a 7% differential in tax rates charged, with basic ratesfor foreign banks at 40% versus 33% payable by Indian banks .  This effectively lowers after-tax
profitability of foreign banks, which would dampen foreign investment in this sector .  Does India
intend to correct this situation?
All prudential regulations are equally applicable both to domestic and foreign banks, thus ensuring a
level playing field to both group of banks.  In fact, in certain areas there is positive discrimination infavour of foreign banks, which have been allowed keeping in view their limited geographical presence
and core competencies.  For example, foreign ban ks are required to deploy 32% of their net bank
credit to priority sectors as against 40% for the domestic banks.  Export finance is reckoned for the
purpose of priority sector in case of foreign banks only.  Further, no specific target is fixed for foreign
banks for lending to agriculture sector as against a target of 18% for domestic banks.  Unlikedomestic banks, there was no compulsion on foreign banks to open branches in rural areas thus
allowing them to limit their operations to more lucrative urban and metropolitan centers.  These
factors, among others, have certainly contributed to  their improved performance vis-à-vis domestic
banks.
As regards tax rates, the foreign banks were charged at rates as applicable to foreign entities.  This
differential has been progressively brought dow n by the Government and all factors considered,
foreign banks cannot be said to be at a disadvantage vis-à-vis domestic banks.
Q.22 We understand that foreign banks that are licensed to operate in India are denied the ability to
access local debt markets to raise Tier 2 capital in the same manner as the local banks .  The capital
would be raised against a parent guarantee whose international credit rating would be very high and
so this would be a high quality investment for Indian investors .  The local Tier 2 Capital raised in this
manner would reduce overall cost of capital thereby enabling further rapid expansion of localoperations/products .  Why are foreign banks not given the same access to the local market as domestic
banks?
A decision has been taken that capital funds of foreign banks have to be augmented only by foreign
currency funds and not raised locally in Indian market.  Therefore, the facility of raising rupee
subordinated debt by foreign banks in India as Tier 2 Capital has not been allowed.
Q.23 We understand also that the decision as to location and timing for the set-up of a new branch
requires prior Reserve Bank approval .  This results in limited ability to prepare and execute expansion
plans .  Why is the process applicable to local banks, which is much simpler and less time-consuming,
not applicable to foreign banks also?
The opening of branches by banks is governed by the provisions of Section 23 of the Banking
regulation Act, 1949.  In terms of these provisions, banks without the prior approval of the RBI, can
not open a new place of business in India or change the location of the existing place of business.
Thus, it is mandatory for all banks, foreign or domestic, to seek prior approval/licence from RBI
before opening of branches/offices.WT/TPR/M/100/Add.1
Page 11
Q.24 Moreover, we understand that the maximum loan that the Indian branch of a foreign bank
may provide to a customer is calculated as a percentage of its locally available capital only, ratherthan the global capital of the bank .  This restriction limits the growth and expansion opportunities for
foreign banks in India .  What plans does the Government have to review this restriction?
The norms have been stipulated keeping in view the best international practices as recognized in the
Basel Committee on Banking Supervision's p aper on “Measuring and Controlling Large Credit
exposures”.  The norm is applied uniformly in respect of both foreign and domestic banks and ensuresthat the banks have adequate capital funds in India to withstand individual large exposures.  Such
prudential norms and linkages to capital funds exist in varying forms in all the countries.
II. Key Developments in Trade and Economic Policy Since the Last Review
(11) Liberalization in Insurance Sector, para. 30:
Q.25 Para. 30 indicates that the maximum foreign ownership in a local insurance company, life or
non-life, is restricted to 26%, which limits management control and decision-making .  Does the
Government contemplate raising this threshold in foreign ownership?
Without any commitment to WTO, the insurance sector in India has been opened up to private Indian
insurance companies, which can have foreign equity up to 26%.  This is as per the provisions of the
Insurance Act, 1938.  At present, there is no proposal to increase the percentage of foreign equity in
Indian insurance companies.
III. India and the WTO, (2) Steps for Intern ational Standards in Trade and Industry,
para. 49:
Q.26 We are concerned with the fact that a number of market access problems faced by some of
India's trading partners stem directly from India's Sanitary and Phytosanitary certification measures,
which are seen as unnecessarily and arbitrarily stringent .  The practice of not accepting certification
from trading partners that are otherwise acceptable to most other countries, and the lack of timelynotification of changes in certification requirements, ar e seen as not being strictly in the spirit of the
Agreement on SPS Measures or to improving the transparency of India's SPS measures .  Please
explain.
India has regularly been notifying various SPS and TBT measures to the respective Committees of the
WTO.  However, in some cases notifications have been issued by the Government of India wherebysanitary and phytosanitary / technical standards or labeling requirements, already being enforced on
domestic manufacturers over a long time, have been extended to the im ported products.  That step is
fully compliant with the national treatment obligations as enshrined in the Art III of GATT 1994.  We
have notified these standards to the WTO.
As regards the issue of accepting certifications from trading partners, it may be noted that India
along with other developing countries has been rais ing the issue of ‘equivalence'.  As a part of
decision on implementation issues, the Members at  the Doha Ministerial Conference have resolved to
expeditiously develop the specific programme to further the implementation of Art 4 of the SPS
Agreement on equivalence.  India is always willing to enter into mutual recognition agreements
(MRAs) with its trading partners in accordance with the provisions of the Art 4 of the SPS Agreement.WT/TPR/M/100/Add.1
Page 12
III. India and the WTO, (3) Intellectual Property, paras 52-53, 57-58
Q.27 Will the new Patent (Second Amendment) Bill see a TRIPs-compatible Act coming into
force?  Also, given past concerns over the implementation and enforcement of intellectual property
rights laws that are otherwise modern and laudable pieces of legislation (e.g. Copyright Act , Trade
Marks Act ), when can we expect strict and transparent enforcement of the laws in the future, including
in the pharmaceutical and entertainment industries?
India's Patent Act 1970 was amended in 1999 to make provisions for mailbox and Exclusive
Marketing Rights(EMRs) as per provisions of Ar ticle 70.8 and 70.9 of TRIPS Agreement.  To make it
compliant with respect to other provisions of TRIP S Agreement,  Patent(Second Amendment) Bill has
been passed by the Parliament in the month of Ma y 2002.  With this amendment, the Patent Act will
now be fully compliant with India's current obligations in the TRIPS Agreement.
India's IPR legislation are transparent.  Provisions have been made for  action under criminal
procedures and penalties and other remedies for infringement of various intellectual property rights.
Government of India gives high priority to enfor cement of copyright laws.  Government has set up a
Copyright Enforcement Advisory Council (CEAC ) to advise on matters relating to copyright
enforcement.  Following the suggestions of the CEAC, State Governments have designated nodal
officers to facilitate proper coordination between copyright industry organizations and theenforcement agencies.  Copyright enforcement cells or special cells in the Crime Branch have been set
up at Police Headquarters in the States/Union Territories to exclusively monitor copyright
infringement cases.  Government, in cooperation with copyright organizations and educational
institutions regularly organizes seminars and workshops in different parts of the country to sensitize
the people about copyright matters.
WTO Secretariat Report WT/TPR/S/100
Summary Observations, (3) Trade and Trade-Related Reforms, para. 11
Q.28 We share the Secretariat's concern over the sharp increase in anti-dumping actions being
taken by India in recent years .  Are some of the increases directly related to the elimination of
Quantitative Restrictions?
It is not clear what is meant by the supposed dire ct relationship between anti-dumping actions and the
elimination of Quantitative Restrictions.  The domestic industry is in the process of adjusting to a newQR free environment.  Anti dumping actions, how ever, are taken after the investigations are
conducted in accordance with the prescribed rules.
I. Economic Environment, (1) Recent Economic Developments, (iii) Structural measures,
para. 17
Q.29 Para. 17 states that measures to liberalize and reduce over-regulation in the economy have
been pursued but that the pace of liberalization has slowed.
- What system has the Indian government put in place to review the different regulatory
measures?WT/TPR/M/100/Add.1
Page 13
- What are the criteria for the selection of the regulatory measures to be reviewed? What is the
time frame to proceed with the selection? What  is the time frame for the completion of the
review?
- How many regulatory measures did India have on the books at the beginning of the process?
- How many regulatory measures were repealed and/or modified, or are in the process of being
repealed and/or modified, as a consequence of the de-regulation effort?
- Why has the pace slowed?
The reference in para.17 about the trend towards reduction of over-regulation and liberalization
refers to every aspect of the Indian economy.  Regulatory measures both sectoral and otherwise are
being reviewed from time to time.  Box I.2 entitled “Regulatory and Structural  changes” in
WTO/TPR/S/100 itself lists some of the liberalization measures that have been undertaken or are
underway.  The second generation reforms are also being undertaken covering not just the CentralGovernment but at the State level also.  Such reforms relate to issues such as Industrial restructuring,
labour reforms, privatization etc. as well as reforms covering major infrastructure sectors such as
energy including petroleum, transport, telecommunications etc.  Several of the measures have also
been documented both in the Secretariat's Report as well as in Paras 13 to 42 of the Report by the
Government.
Undertaking de-regulation and bringing about further economic reforms requires building up of a
political consensus as also the need for phasing and sequencing of these measures.  This is a time
consuming and challenging process.  Despite this, the Government is committed to undertake these
reforms with continued emphasis on fiscal c onsolidation and financial sector reforms.
II. Trade Policy Regime:  Framework and Objectives, (1) Trade and Trade-Related Policy,
(ii) Institutional and legal framework, para. 11
Q.30 The Report refers to a number of governance challenges, including in the field of
transparency.  Regarding international notifications, India stated in a communication to the WTO on
24 September 1998 (G/TBT/W/93) that the Bureau of Indian Standards (BIS) had decided to extend
the period of comment from 60 days to 90 days.  How do you explain that notification
G/TBT/N/IND1 on labelling of packaged products al lows for a comment period of only 60 days?  Has
India changed its policy?
Notification G/TBT/N/IND1 appears to be the firs t TBT notification from India since 1 January 2001.
Has India not adopted any technical regulation that may have a significant effect on trade in the past
18 months?
- What are the domestic requirements for regulatory transparency?  What is the typical
publication period for a proposed technical regulation?
- Do you have a domestic obligation to prepare/publish a Regulatory Impact Assessment (RIA)
document with the proposed regulation?
- If yes, what are the requirements for the preparation of the RIA?
- Are there policy requirements to identify a lternatives to regulations when assessing a
perceived problem? If yes, where are the policy requirements stated?WT/TPR/M/100/Add.1
Page 14
As per India's communication to the WTO bearing No. G/TBT/W/93, BIS provides the period of
90 days to enable the member countries to send their comments on a draft technical regulationproposed to be finalized by BIS.  The notification referred to above in the question relates to DGFT
notification No. 44 of 24 November 2000 which provides for mandatory application of Indian quality
standards on import of 131 items annexed to the said  notification.  Two more items were subsequently
added to the list.  It may be noted that the labe ling requirement imposed by notification No. 44 on
imports have been imposed on domestic items dati ng back from 1977 under various national statutes.
Nevertheless, in order to acquaint the members with the measures, we have notified these standards to
the WTO.
India has notified various other measures to the WTO so as to acquaint all members with the
concerned measures.  Technical regulations are finalized by various departments and ministries of
the Govt. of India depending on the nature of the proposed regulations.  For example regulations onfood items are standardized by the Ministry of Health and Family Welfare under Prevention of Food
Adulteration Act 1954.  The general practice is to publish the proposed regulation in a draft form in
the Gazette of India inviting objections and suggestions from all persons likely to be affected within a
reasonable period of time.  In the light of co mments and suggestions received, the regulation is
finalized and applied.
II. Trade Policy Regime:  Framework and Objectives, (1) Trade and Trade-Related Policy,
(iii) Trade policy formulation and implementation, para. 13
Q.31 Para. 13 states that the Department of Commerce (part of the Ministry of Commerce and
Industry) formulates, with others, trade policies, and that an entity of that department, the Directorate
General of Foreign Trade, is responsible for the execution of the policies.
- Is the Directorate General of Foreign Trade (DGFT) directly involved in regulation-making?
If yes, what is the nature of its involvement? What is the process followed?
- Is there any requirement for regulatory agencies  to take international agreements (including
trade agreements) into account when regulating? If yes, where is the requirement stated?
- In any case, who in the Indian government ensures that international obligations are respected
in regulatory measures?  Is it the role of the DGFT, or of a central agency of the Government?
The Export and Import (EXIM)  Policy of the Government of India is notified by the Central
Government in exercise of the powers conferred under Section 5 of the Foreign Trade (Development
and Regulation) Act, 1992.
As per Section 6 of the said Act, the Central Government may appoint any person to be the Director
General of Foreign Trade for the purposes of the said act.  The Director General shall advise the
Central Government in the formulation of the EXIM Policy and shall be responsible for carrying outthat policy.
Since DGFT is part of the Mini stry of Commerce and Industry (Central Government), Ministry of
Commerce and Industry through its Trade Policy Division ensures that international obligations are
complied with.WT/TPR/M/100/Add.1
Page 15
III. Trade Policies and Practices by Measure, (2) Measures Directly Affecting Imports,
(iv) Tariff Exemptions and Other Concessions, para. 25
Q.32 Para. 25 mention that 415 tariff exemptions are proposed for the 2002-2003 period.  Please
specify out of the 415, which agricultural products will be listed for exemptions.  Also, please provide
the applied tariffs that will be implemented under these exemptions and specify who will be entitled
to them.
The first 56 entries (barring entry 52) of the 415 entries in the Exemption list (Notification 21/2002 –
Customs dated 01.03.2002) refer to agricultural products.  These exemptions are applicable to
imports by any importer.  In certain cases, the imports are subject to meeting certain specified
conditions.  The details of the products and conditions applied on grant of the exemptions are
available at http://www.cbec.gov.in/cae/customs/ cs-act/notifications/n otfns-2k2/cs21-2k2.htm
III. Trade Policies and Practices by Measure, (2) Measures Directly Affecting Imports,
(xi) Contingency Measures, Box  III.1:  Anti-dumping and countervailing procedures,
paragraph on provisional duties
Q.33 Box III.1 states that India may impose prov isional duties for a period not exceeding six
months and may extend this period to nine months upon request by the exporters representing a
significant percentage of the trade involved.  Please clarify or reconcile these time periods in relationto article 7.4 of the Anti-dumping Agreement, which provides that the normal period for the
application of provisional measures should not exceed four months or, upon request by exporters
representing a significant percentage of the trade involved, a period not exceeding six months.
Article 7.4 of the WTO Agreement on anti dumping clearl y provides that in the case 'lesser duty rule'
is followed, the period of provisional duty may be  six months which can be extended to nine months
upon request by exporters representing significant percentage of trade involved.  Since India follows
lesser duty rule, these provisions have been  incorporated in our legislation.  However, the period ofprovisional duty has never been extended beyond six months in the investigations undertaken so far.
III. Trade Policies and Practices by Measure, (2) Measures Directly Affecting Imports, (xii)
Standards, testing, and certification, para. 47
Q.34 Para. 47 states that, in order to ensure the continued relevance of standards, Indian standards
are reviewed as and when considered necessary, but at least every five years.
- How many Indian standards were reviewed in 2001 because it was necessary?  And how
many were reviewed because the five-year deadline had arrived?
- Please answer the same questions for years 2000, 1999, 1998, 1997, and 1996.
Standards are reviewed every five years.  Year wise details of the number of standards reviewed are
as follows:
95-96 - 3908
96-97 – 3294
97-98 – 3218
98-99 – 3082WT/TPR/M/100/Add.1
Page 16
99-00 – 3040
2000-2001 – 38032001-2002 – 3553
III. Trade Policies and Practices by Measure, (3) Measures Directly Affecting Exports,
(ix) State Trading:
Q.35 With reference to India's EXIM Policy for 2002-2007 and Table III.5 of the Report, please
describe the conditions under which the Food Corporation of India (FCI) and the Director General ofForeign Trade may grant a license/certificate/permission for the import of food grains, including
wheat .  Has the Director General of Foreign Trade granted any licenses, certificates, or permissions in
the past? If yes, for what specific products and volumes?
As per para. 2.11 of EXIM Policy, 2002-2007, any goods, the import or export of which is governed
through exclusive or special privileges granted to State Trading Enterprise(s), may be imported orexported by the State Trading Enterprise(s) as specified in the ITC(HS) Book subject to the conditions
specified therein.  The Director General of Foreign Trade may, however, grant a
licence/certificate/permission to any other person to import or export any of these goods.  An
application for such imports may be made, in th e form given in Appendix 8 of the Handbook of
Procedures, Vol. I, to Director General of Foreign Trade.  The licence for import may be granted bythe Director General of Foreign Trade or any other licensing authority authorized by him in this
behalf.  The DGFT/Licensing authority may take assist ance and advice of a licensing committee.  The
licensing committee consists of technical authorities and departments/ministries of Government of
India.
In respect of goods the import or export of which is governed through exclusive or special privileges
granted to State Trading Enterprise(s), the State Trading Enterprise(s) shall make any such purchases
or sales involving imports or exports solely in accordance with commercial considerations, includingprice, quality, availability, marketability, transportation and other conditions of purchase or sale.
These enterprises shall act in a non discriminatory manner and shall afford the enterprises of other
countries adequate opportunity, in accordance wi th customary business practices, to compete for
participation in such purchases or sales.
As per the ITC (HS) Classification of Export and Import Items 2002-2007,  import of wheat is allowed
through FCI, which is a State Trading Enterprise, subject to para 2.11 of EXIM Policy.  FCI cannot
grant any licence.  No application for import of wheat has been received by DGFT.
III. Trade Policies and Practices by Measure, (3) Measures Directly Affecting Exports,
(x) Free Trade Zones, para. 88
Q.36 What main agricultural products are being ta rgeted by the agricultural export zones (AEZ)?
Please specify the extent of services that will be available in the AEZ for these products? According
to India's EXIM Policy for 2002-2007, the AEZ will ensure the provision of pre/post harvest
treatment and operations, plant protection, processing, packaging, storage, related research &
development, and others .  What additional services and/or benefits will be provided and at what
levels? What are the specific benefits associated to each status levels, i.e., "star trading", "super startrading", etc?WT/TPR/M/100/Add.1
Page 17
The main agricultural products being targeted for exports by the Agricultural Export Zones (AEZs)
include fruit, vegetables and flowers.  The servic es enumerated in the EXIM Policy are now being
carried out by various Govt. agencies in different parts of the country.  The benefits that will accrue
to the enterprises in the AEZs will emanate from th e focus and integration of services in the AEZs.
The specific benefits available to Star Trading and Super Star Trading Enterprises are provided
across the board for all sectors.
III. Trade Policies and Practices by Measure, (4) measures Affecting Production and Trade,
(i) Industrial Policy, (a) Industrial licensing, paras 99 and 101
Q.37 According to the Government of  India, the rationale for such licensing is to regulate capacity
addition and location, based on certain strategic and industrial development considerations.
(i) What are these strategic and industrial development considerations?
The main consideration for industrial licensing are compliance with environmental laws and zoning
and land use regulations, besides safety and security point of view.
(ii) What is the nature of these considerations - regulatory or not regulatory? If not regulatory,
what are they?
(iii) How are these considerations developed?  Is it an objective of India to ensure the process is
both open and transparent?  If yes, please identify how this is achieved?
(ii) and (iii): All industrial undertakings are exempt from obtaining an industrial license to
manufacture, except for (i) industries reserved  for the Public sector (Atomic energy and Railway
transport);  (ii) industries retained under compulsory licensing (distillation and brewing of alcoholic
drinks;  Cigars and cigarettes of tobacco and manufactured tobacco substitutes;  Electronic
aerospace and defence equipment;  all types;  Indu strial explosives including detonating fuses, safety
fuses, gun powder, nitrocellulose and matches;  Hazardous chemicals;  and Drugs and
Pharmaceuticals (according to modified Drug Policy issued in September, 1994 and subsequentlyamended in February, 1999);  (iii) items of manufactu re reserved for the small scale sector and (iv) if
the proposal attracts location restrictions.  As indicated above there are only six industries, which
require compulsory licensing.  However, manufact ure of SSI reserved items by other industrial
undertakings and location of industrial undertakings in relaxation of the notified locational policy
will attract compulsory licensing.  Licensing is insisted upon because of environment protection and
pollution control angles and because of the safety and security points of view, in general.  Issues
related to the small-scale sector are also an important consideration.
(iv) Are the sectoral policies of the ministry concerned (cf. para. 101) different from the strategic
and industrial development considerations of para. 99? If yes, what is their nature?
As far as industrial licensing is concerned, sectoral policies would supplement environmental, safety
and strategic considerations, in general.
(v) What are the criteria used by the state governments to recommend location?  Where are they
stated?
Location of an industrial project depends on the State land laws;  zoning and land use regulation and
the policies of the concerned State Government in this regard.WT/TPR/M/100/Add.1
Page 18
(vi) What is the process?  Can the process be appealed?  How are the criteria developed?  What is
their nature?
(vii) What is the weight of the state government recommendation?
(viii) Can the whole process be appealed?  If yes, to what entity of the government?  Or to what
tribunal?
(vi), (vii) and (viii):  In accordance with  the statutory provisions, reasons for refusal to grant
industrial approval are to be intimated to the applicant  State government's recommendations aregiven due consideration.
III. Trade Policies and Practices by Measure, (4) Measures affecting production and trade,
(iv) Competition policy and regulatory issues, para. 147:
Q.38 Para. 147 states that the Indian Cabinet has introduced a Competition Bill which will replace
the Monopolies and Restrictive Trade Practices Act from 1969 and expand the scope and coverage ofcompetition law in India .  Please indicate the status of this Bill, and when the legislation and new
Competition Commission of India is expected to be in place .  Please provide further information
about the scope and coverage of the legislat ion, including any exceptions it may contain.
The Bill is presently before the Indian Parliament for consideration and will become an Act when
passed by the Parliament
The objective of the Bill is to provide for the establishment of a Competition Commission to prevent
practices having adverse effect on competition, to provide and sustain competition in markets in
India, to protect the interests of consumers, and to  ensure freedom of trade carried on by participants
in market in India and for matters connected therewith or incidental thereto.
The bill is before Parliament.  The text of the Bill, as introduced in the Parliament, is available at the
web site of the Department of Company Affa irs, Government of India, at www.nic.in/dca/
IV. Trade Policy by Selected Sectors, (2) Agriculture, (iv) Internal Policies
Q.39 The Report quotes a Ministry of Finan ce document that acknowledges the production-
distorting nature of minimum support prices which are higher than the market price .  The result is that
public stocks of grains have increased dramatically in recent years .  What measures has the
Government taken to ensure that increased freight-related export subsidies for agricultural products
will not further increase surplus agricultural production?
A series of initiatives have been taken in the agriculture sector to reduce the existing market
distortions and at the same time to safeguard the interest of the farmers.  Trade in agricultural
commodities has been freed from controls under the Essential Commodities Act 1955.  The
Government has removed licensing and stocking requirements and movement restrictions enabling
free and unrestricted stocking and trading in wheat, rice, coarse grains, edible oils, oil seeds andsugar so as to have an integrated countrywide mark et for agricultural products.   An amendment of the
Milk and Milk Products Control Order has been effected w.e.f. 26.3.2002 to remove restrictions on
new milk processing capacities while at the same time to continue to regulate health and safety
conditions.WT/TPR/M/100/Add.1
Page 19
With regard to measures taken by the Government to ensure that trade related export subsidies for
agriculture do not result in increase in surplus agricultural production, it may be noted thatexportable surplus in India is only a recent phenomenon and is not significant.  The socio-economic
vulnerability of Indian agriculture has to be kept in mind while considering this question.  Indian
Agriculture is heavily dependent on weather and is susceptible to natural calamity leading to
fluctuations in production.  The stocks of foodgrains are being used for the purpose of distribution to
the families Below the Poverty Line (BPL).  In addition, these foodgrains are also used for thegeneration of employment and creating assets in the rural areas.  Schemes have also been devised to
provide food security in the rural areas by establishing Grain Banks for which the allocation of
foodgrains is made from the public stocks.  These measures are expected to reduce the public stock of
foodgrains.  Considering the substantial contribution agriculture makes to India's GDP, dependence
of a huge population on agriculture for their livelihood etc. and increase in domestic consumption,India can ill afford slow down in production.
IV. Trade Policy by Selected Sectors, (2) Agriculture, (iv) Internal Policies
Q.40 How does the Government of India plan to a ddress the issue of growing stocks on a long-term
basis to avoid having to resort to their disposal at "heavily subsidized prices" or to avoid encountering
unsustainable costs to maintain stocks at levels greater than necessary for the purposes of foodsecurity?
To dispose of the surplus stocks the Govt. of India has been using a part of these surplus  stocks to
create assets in the rural areas through various employment generation programmes and distribute
foodgrains to the people Below the Poverty Line at concessional prices.  These steps are required to
ensure that food security and livelihood concerns of the vulnerable Sections of the population are
adequately addressed.  The State Governments have been encouraged to procure foodgrains from
their States  to enable proper utilization of the foodgrains so procured by the States in their respectiveStates.  Certain schemes are also being implemented to shift areas from cereals cultivation to pulses
and oil seeds cultivation.  These efforts are however being thwarted by the heavy subsidies given by
the developed countries for the foodgrain production.  These subsidies depress prices in the
international markets and lead to reduced opportunities for export by the developing countries.  It is
these trade distorting subsidies that are of more concern to food security concerns of the developingcountries.  India would propose bringing the export subsidies, export credit, export insurance and
export guarantees etc. under discipline in the WTO.
Q.41 Please explain how the freight-related subsid ies for agricultural products, especially wheat
and rice, are consistent with India's food security objectives as it could be expected that these would
potentially reduce availability of stocks for the local population while causing food prices to increase.
The freight related subsidies for agricultural products alone cannot achieve India’s food security
objective unless the developed countries ensure that the distortions created by them in the
agricultural trade through domestic support and export subsidies are done away with.  If such
distortions are done away with or reduced, Indian agricultural products will be able to compete in the
international markets.  These freight related subsidies may not be required then.  These should alsobe viewed as a mechanism to stabilize incomes.  Otherwise also, the quantity of exports of foodgrains
from India are not high in comparison to our requirements as well as in comparison to the
internationally traded volumes.WT/TPR/M/100/Add.1
Page 20
IV. Trade Policy by Selected Sectors, (4) Services, (iv) Banking and Insurance
(a) Banking;  Box IV.3:  Restructuring weak public-sector banks
Q.42 In 2000 the Government introduced in Parlia ment an amendment to the Banking Companies
(Acquisition and Transfer of Undertakings) and Fi nancial Institutions Laws (Amendment) Bill to
reduce the minimum government shareholding in public banks from 51 to 33 percent .  However, the
WTO Secretariat's Report did not state whether or not this Bill was passed .  Please provide an update
on the current status of these proceedings.
The Bill was introduced in the Parliament, which has referred it to the Standing Committee on
Finance and is under its examination.  The Parliamentary Standing Committee reviews/examines the
bills referred to them and makes suitable recommendations to the Government.  This is an important
and integral part of the parliamentary process.
IV. Trade Policy by Selected Sectors;  (4) Services, (iv) Banking and Insurance;  a) Banking;
para. 87
Q.43 In the Budget for 2002/03, changes are proposed  to allow foreign banks to establish branches
or subsidiaries in India .  Would the proposed changes allow full discretion by foreign banks to choose
between operating as a branch or subsidiary, or  would foreign banks be encouraged to become
subsidiaries? Also, please confirm whether as a subsidiary, national treatment would apply – that is,foreign firms would face the same regulatory responsibilities as domestic companies.
As per the budget announcement, it was decided to give an option to foreign banks to either operate
as branches of their parent banks or set up subsidiaries.  A foreign bank has to choose only one of the
two options.  Such subsidiaries will have to adhere to all banking regulations, including priority
sector lending norms, applicable to other domestic banks.
General Query
Q.44 We understand that there is a discrepancy in tax rates applied to foreign banks operating in
India versus their domestic competitors .  If this is the case, please provide the rationale for this
difference.
Please see answer to Question No.21.
JAPAN
Questions on the Report by the Secretariat (WT/TPR/S/100)
III. TRADE POLICIES AND PRACTICES BY MEASURE
(2) M EASURES DIRECTLY AFFECTING IMPORTS
Tariffs(p. 27, para. 11;  p. 28 paras 12 and 13)
Q.45 Japan notes that the Indian customs tariff is a major source of revenue for the Central
Government.  However, Japan is concerned that the difference between the bound and applied tariff
rates is still significant (i.e. according to the Report, the average applied tariff is 32.3%, while theWT/TPR/M/100/Add.1
Page 21
overall average bound tariff for 2005 is expected to be 50.6%).  In order to improve predictability in
tariffs, Japan requests India to reduce its bound rates during the ongoing market access negotiations.
Japan’s request has been noted.  India would not like to offer any further comments at this stage since
this is a matter for consideration at the ongoing negotiations.
Tariff preferences
(p. 36, para. 29)
Q.46 The Report states that India has signed a free-trade agreement with Sri Lanka, which came
into force on 1 March 2000.  Has this free-trade agreement already been notified to the WTO?  If not,
when will it be notified?
Yes. The Agreement has been notified on 17 June 2002.
(p. 41, para. 42)
Q.47 Japan is of the view that any abuse of anti-dumping measures for the protection of the
domestic industries should not be permitted.  What is India’s view concerning the use of anti-dumping
measures?
India agrees that anti dumping measures should be used only to curb unfair trade practices of
dumping and there should not be any abuse of the anti dumping measures for the protection of the
domestic industry from fair competition.
Q.48 The Report states that the number of anti-dumping measures in force has risen steadily,
especially since 1997, from 19 notified measures in force to 131 in 2001.  What is the reason for such
a big increase?
There have been progressive removal of quantitative restrictions over the last five years by India and
also customs duty on imports have been reduced continuously as a part of the process of
liberalization.  However the process of liberalization can be sustained only if there is fair trade and
level playing field between the imported products and  domestic industry.  Whenever the domesticindustry adversely affected by dumping files fully documented petition,  to curb the  unfair trade
practice, India has to take recourse to anti dumping measures after initiating  and conducting
investigations in accordance with the procedures of WTO Agreement on Anti Dumping practices.
Q.49 The Report states that the majority of the initiations have been for chemical and related
products (47.2%).  Japan would like to have India's view on the effect of these AD measures(including investigations) on its domestic industries which use foreign chemical products, as well as
on domestic chemical industries themselves.
Empirically  chemical and related products  accoun t for several of initiations of AD investigations.
However, the initiations are done only on receipt of fully documented petition from domestic  industry
having the standing  to file the petition  and producing prima facie  evidence of dumping,  injury  andcausal link.  The user industry is given full opportunity to present their views in the  investigations
and their interests are taken into account while making recommendations for imposition of anti
dumping measures.WT/TPR/M/100/Add.1
Page 22
Standards, testing, and certification
(p. 44, Box III.2)Q.50 At which stage does notification by India, pursuant to the TBT Agreement, concerning any
new standards or revised standards take place?
India notifies its technical regulation in accordance with Art 2 of the TBT Agreement.
(p. 45, para. 50)
Q.51 By the Notification of 24 November 2000, the BI S (Bureau of Indian Standards) Certification
Mark was made mandatory for 133 items.  Japan is concerned about this measure in light of the TBT
Agreement, as it seems to create unnecessary trade barriers, and the conformity assessment
procedures are not clear.  Please provide a detailed explanation on the purpose of this measure, its
necessity and its consistency with the WTO Agreement, as well as any information on the conformity
assessment procedures.
Notification number 44 dated 24.11.2000 has required the importers to comply with two separate
requirements. (i) All packaged commodities has been made subject to provisions of the Standards of
Weights and Measures (Packaged Commodities) Rule s 1977 upon import to India.  All prepackaged
commodities, imported to India, are required to carry the declarations like name and address of the
importers, net quantity in terms of standards un its of weights and measures, month and year of
packing, maximum retail sale price etc.;  (ii) Import of 133 (list of 131 items annexed to the
Notification number 44 itself and 2 items added  subsequently vide Notification number 7 of
31 March 2001) commodities has been made subject to compliance of mandatory Indian quality
standards.
The measures introduced vide Notification 44 dated 24 November 2000 are within the parameters of
Article III of GATT and Agreement on Technical Barriers to Trade and have only highlighted
applicability of those standards on imported products, which are already mandatorily applicable ondomestic products.
Moreover para 4.12 of the then applicable EXIM Policy (1997-2002) and para 2.2 of the current
EXIM Policy (2002-2007) explicitly stipulate that all imported goods shall also be subject to domestic
laws, rules, order, regulations, technical specific ations, environmental and safety norms as applicable
on domestically produced goods.  Therefore the l abeling requirements on imports introduced vide
Notification no. 44 are not new.  These technical standards or labeling requirements, are already
being enforced on domestic manufacturers over a long time.  India has already notified the measure
to the TBT Committee for the information of the members.
(p. 46, para. 55)
Q.52 The Report states that, by the Notification of 24
 November 2000, all packaged products are
required to carry the following information:  (i) name and address of the importer;  (ii) generic or
common name of the commodity;  (iii) net quantity in terms of standard unit of weights and measures
(or its equivalent if given in any other unit);  (iv) month and year in which the commodity was
manufactured, packed, or imported;  and (v) maximum retail sale price.  Japan would like to know the
purpose and the necessity of this measure.WT/TPR/M/100/Add.1
Page 23
In India domestic manufacturers have to comply with the provisions of Standards of Weight and
Measures Act 1976 regarding packaging of the products.  These requirements, inter alia, includeindicating month and year of packing, maximum retail price(MRP),  net quantity in terms of standard
unit of weight and measure etc.  All these requirem ents including MRP is essential from the point of
view of consumer interest and protection.
(3) M
EASURES DIRECTLY AFFECTING EXPORTS
TRIMs
(p. 62, para. 93)
Q.53 Japan understands that, based on the results of  the panel and the Appellate Body, India will
eliminate the performance requirements on automobile parts.  Please indicate India’s current situation
on the scheduling of such elimination?
India is in the process of consulting with EU a nd US for arriving at a Reasonable Period of Time
(RPT) for implementing the decision of the DSU on the dispute 'India-Measures affecting the
Automobile Sector'.
(4) MEASURES AFFECTING PRODUCTION AND TRADE
Competition policies
(p. 85, para. 144)
Q.54 The Report states that, from April-December 2000, the MRTP Commission received 1,554
enquiries related to restrictive trade practices, of which 102 cases were settled, and 1,424 enquiries
regarding unfair trade practices, of which 92 cases were dealt with, and that these cases involved only
Indian companies.  It seems that the action by the MRTP Commission against anti-competitive
activities by foreign companies is rather weak.  Please provide information on cases which involved
foreign companies.
The law should, and does, deal with anti-competitive behaviour in the Indian market,  whosoever,
whether Indian, or of foreign origin, indulges in such anti-competitive behaviour.  The MRTPC is
dealing with cases pertaining to multinationals  such as American Natural Soda Ash Corporation
(ANSAC), Coca Cola, Pepsi, Whirlpool, and LG Electronics.
Q.55 Japan believes that cases which involve foreign companies shall be on the increase in India.
Please provide India’s view on the need to cooperate with foreign competition authorities.
It is quite possible that cases involving foreign companies may rise.  Appropriate ways will need to be
considered with due regard for their effectiveness, and keeping in view India’s needs and development
objectives.
(p. 86, para. 147)
Q.56 The Report states that a Competition Bill was introduced by the Indian Cabinet in Parliament
on 6 August 2001, and is aimed at checking the abuse of anti-competitive agreements and dominant
market position, and regulating procedures related to mergers and acquisitions.  Have definitions
concerning "abuse of anti competitive agreements and dominant market position", "cartel",WT/TPR/M/100/Add.1
Page 24
"collusion", "price fixing", "bid rigging", "boycott " "refusal to deal" and "predatory pricing", which
were not defined in the MRTP Act, have been clearly defined in the Bill?
In the Bill now before the Indian Parliament anti-competitive agreements, dominant position, cartel,
bid rigging, refusal to deal, predatory pricing etc. have been defined
Q.57 Please provide a detailed explanation on the points which have been improved from the
MRTP Act.
Under the Competition bill, dominance per se is not bad but only the abuse of dominance is
considered bad, whereas under the MRTP Law, dominance itself is bad;
MRTP Act is based on the size as a factor whereas the new Bill will be based on the structure as a
factor;
MRTP Act provides for Registration of agreements as compulsory whereas in the new Law there is no
requirement of registration of agreements;
Combination Regulations mentioned in the Bi ll ensure that Competition is not reduced.
Combinations are not regulated by MRTP Act;
MRTP Act has powers only to pass “Cease and Desist” orders and did not have any other powers to
prevent or punish, whereas the Competition Law aims at deterrent and preventive measures apart
from having punitive provisions;
Q.58 According to the Report, if this Bill is enacted, the Competition Commission of India (CCI)
would replace the MRTP Commission.  Please explain the difference between the CCI and the MRTP
Commission, which is an independent semi-judicial or ganization, with regard to the position in the
Government, the structure and other differing aspects.  Japan would like to know the number of
members making up the CCI.  It would also like to know the problems recognized by India
concerning MRTP Commission.
The proposed competition commission shall consist of a Chairperson and not less than two and not
more than ten other Members.  The reasons for having a new law in place of MRTP are indicated in
the reply to Q. 57.
Q.59 Japan appreciates India's efforts towards strengthening its competition legislation (e.g. by
making a new Competition Bill).  In this regard, Japan believes that a well-balanced pursuit of
industry policies, development policies and competit ion policies is important.  Please provide India’s
comment on this point.
India agrees with Japan’s views.  However, India st rongly feels that developing countries should have
freedom to build in flexibility as required by their development needs.  Also, depending on their
experience in the implementation of  their competition policies and other policies they should have the
flexibility to make such changes as may be considered to be in their national interest and consistentwith their level of development.WT/TPR/M/100/Add.1
Page 25
Intellectual property rights
(p. 89, para. 156)
Q.60 The Report states that in India the protection of intellectual property rights is on the basis of
reciprocity as stipulated in various laws.  Please explain the consistency of this statement with Article
4 of the TRIPS Agreement, which provid es for a most-favoured-nation treatment.
India provides protection to IPRs on MFN basis to the nationals of all the  Members countries of WTO
and also provides national treatment to them.  The Geographical Indications(Registration andProtection) Act, the Trade Mark Act, Patent Act, Designs Act, Semiconductor Integrated Circuits
Layout-Designs Act and Protection of Plant Varieties and Farmers’ Rights Act provide that any
person can apply for IPR protection under these Acts.
Reciprocity has been extended to the member states or signatory states of all international
agreements like TRIPS, Paris Convention and PCT which require that such reciprocity should beprovided.  Therefore the provisions of the Indian law in that respect are consistent with Article 4 of
TRIPS Agreement.
Works of other WTO members get “national treatment” as provided in sections 40 and 40 A of the
Indian Copyright Act, 1957 read with para 3 of International Copyright Order, 1999.  Copyright of
works first made or published in a country or the author of which was, at the date of such publication,a national of a country who is Member of the World Trade Organization are protected in India as if
they are Indian works, based on section 40 of the Indian Copyright Act, 1957 read with International
Copyright Order, 1999.  Accordingly all provisions of the Indian Copyright Act, 1957 will apply as if
they are Indian works.
(p. 93, para. 175)
Q.61 The Report states that the additional protection for geographical indications under Article 23
of the TRIPS Agreement should be extended to produ cts other than wines and spirits (e.g. Basmati
rice, among others).  What, in India's view, is the purpose of protection for geographical indications?
In addition to the products described the above mentioned paragraph, what products, according to
India, should be protected  and for what purpose?
The significance of geographical indications is growing as increasing quality awareness and higher
quality requirements promote the de mand for products of a specific geographical origin.  Article 24.1
requires that members enter into negotiations aimed at increasing the protection of individual
geographical indications under Article 23.  This sentence, in our understanding, inter alia, forms the
basis for negotiations to extend the additional protection under Article 23 to products other than
wines and spirits such as Basmati rice, Alphonso mangoes, Darjeeling tea, Kolhapuri chappals, etc.
As regards higher level of protection for geographical indications (other than wines and spirits)
section 22(2) of the Geographical Indications (Registration and Protection) ACT (GI Act) provides
for additional protection to notified goods.  As India has a vast agro-industrial base it is possible that
some geographical indications (other than wine and spirits) such as for Basmati rice and tea could be
subject matter for additional protection.  India’s concerns in the field of Intellectual Property
Protection to geographical indications flow from the vast variety of agricultural and non-agriculturalproducts which are unique to specific regions invo lving both natural and human elements that are the
typical features of such indications.  The purpose of protection of geographical indications of naturalWT/TPR/M/100/Add.1
Page 26
and manufactured goods is to ensure the quality  and the genuineness of such products and to protect
the consumer from deception.
Q.62 Please explain India's position on the creation of a multilateral system of notification and
registration.
India's position on this issue is being stated in the TRIPS Council.
(p. 95, para. 183 and Table III.18)
Q.63 Although the piracy rates of motion pictures and business software have been declining, they
still remain high.  Furthermore, the piracy rates for sound recording and entertainment software rates
are increasing.  What is the reason for this?  And what measures does India intend to take to solve
this?
Government of India gives high priority to enfor cement of copyright laws.  Government has set up a
Copyright Enforcement Advisory Council (CEAC ) to advise on matters relating to copyright
enforcement.  Following the suggestions of the CEAC, State Governments have designated nodal
officers to facilitate proper coordination between copyright industry organizations and the
enforcement agencies.  Copyright infringement is a criminal offence.  The prime responsibility to nab
the culprits rests with the Police.   Copyright enforcement cells or special cells in the Crime Branch
have been set up at Police Headquarters in the States/Union Territories to exclusively monitorcopyright infringement cases.  Government, in cooperation with copyright organizations and
educational institutions regularly organizes seminars and workshops in different parts of the country
to sensitise the people about copyright matters.
(p. 96, para. 184 and p. 95, Table III.18)
Q.64 Japan appreciates India's efforts towards enforcing the protection of intellectual property
rights.  However, as seen in Table III.18, the current situation in piracy is still serious.  How effective
are expected to be the measures taken by India to reduce piracy?  On what basis does India estimatesuch effectiveness?
As per the reports received from National Crime Records Bureau(NCRB) which is responsible for
monitoring copyright infringement cases, the tota l number of cases registered increased from 1,980 in
year 1999 to 2,354 in year 2000.   The cases convicted increased from 184 to 374 during this period.
This shows that rate of conviction has increased from 10.6% in 1999 to 16.75% in the year 2000.
IV. TRADE POLICIES BY SELECTED SECTOR
(2) A
GRICULTURE
Export restrictions
(p. 103, para. 19)
Q.65 The Report states that the Ministry of Commerce, through the Director General of Foreign
trade, notifies the imposition or elimination of the restrictions on the exports of agricultural goods
when pertinent.  The Report also states that these measures are put in place (or removed) with a view
to maximizing agricultural exports earnings.  Please explain how such export restrictions have been
imposed on what kind of products.  Currently, on which products are such export restrictions beingWT/TPR/M/100/Add.1
Page 27
imposed?  Please indicate in detail the conditions for imposing, as well as eliminating, such export
restrictions.
During the last three years there has been progressive and continuous liberalization in so far as
agricultural commodities are concerned.  No additional restrictions have been imposed on
agricultural commodities during the last three years, i.e. 1999-2002.
Major items which have been made free for exports during the three years period as above are pulses
(made freely exportable with effect from 5.3.2002), tea (made freely exportable with effect from10.9.2001), wheat and wheat products (made freely exportable with effect from 5.3.2002, the
condition of registration with APEDA removed on 31.03.2002), coarse grains, rice (non-basmati- the
condition of registration with APEDA removed on 5.03.2002), sugar (made freely exportable on
16.05.2001 without any condition), raw cotton (m ade freely exportable on 2.7.2001 without any
condition) and 10 varieties of agricultural seeds and planting material.
Currently, no export restrictions exist on agricultural commodities.  However, onions, niger seeds and
gum karaya are allowed only through designated State Trading Enterprises which function in
accordance with Article XVII of GATT.
Q.66 Japan is of the view that, in order to en sure the food security of the net food importing
countries, it is important to establish a stable international agricultural market by strengthening therules concerning the exports of agricultural goods, including giving improved predictability through
the binding of export duties.  What is India’s view on this?
India in its proposal to Committee on Agricu lture (G/AG/NG/W/102 15 January 2001) had proposed
that:
(i) Export subsidies on all agricultural products should be eliminated in the first 2 years of
implementation, both in terms of ex port subsidy outlays and subsidized volumes.  As a down payment,
the subsidy outlays and subsidized volumes should be reduced by 50% from the level maintained inthe year 2000 by the developed countries by the end of 2001.  (ii) During the transition period also,
no ‘rolling over’ of unused export subsidies should be allowed.  (iii)All forms of export subsidization
including export credit, guarantees, price discounts and insurance programmes etc. in developed
countries should be added to the export subsidies and should be subjected to the overall disciplines
applicable to export subsidies.  (iv) Taking into account the needs and special conditions ofdeveloping countries the existing special and differential treatment for developing countries under
Article 9.4 of the AoA should continue;  and Special dispensation for developing countries provided
under Article 27 read with Annex VII of the Agreement on Subsidies and Countervailing Measures
should prevail over Article 8 of AoA. Article 13 (c), which gives protection to export subsidies that
conform to the provisions of part (v) of AoA, shoul d be abolished forthwith.  After the abolition of the
peace clause (Article 13 of AoA), the provisions under Article 9.1 (d) & (e) permitted to be used by
developing countries without any reduction commitm ents under Article 9.4 of AoA should be retained
as such and should be exempt from countervailing duties and actions based on Article XVI of GATT
1994 and the Agreement on Subsidies and Countervailing Measures.WT/TPR/M/100/Add.1
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(4) S ERVICES
Financial services
(p. 121, para. 83)
Q.67 According to the Report, India announced that it would be permitting overseas banking units
in the special economic zones, and that these banks would be exempt from prudential requirements,
such as minimum capital asset ratios and statutory lending requirements.  What are considered as "the
special economic zones"?  When will this permission take effect?
Special Economic Zone (SEZ) is a specifically de lineated duty free enclave and is deemed to be
foreign territory for the purposes of trade operations and duties and tariffs.
The Government has announced that Overseas Banking Units (OBUs) will be permitted to be set up in
Special Economic Zones.  Detailed guidelines are being worked by the Reserve Bank of India.
Proposals for establishment of Overseas Banking Units will be considered after issue of the detailedguidelines by the Reserve Bank of India.
Telecommunications
(p. 128, para. 98)
Q.68 Does India have any plans of further rela xation on the restrictions on foreign ownership?
Foreign Direct Investment Policy is reviewed from  time to time depending upon the need and security
considerations.
Rail transportation
(p. 134, para. 110)
Q.69 Concerning market access to private railway  companies in India, do there exist any non-
discriminative conditions on their market access?  If so, please provide details of such conditions.
As per Industrial Policy Declaration of 1991, Rail Transportation has been reserved for public sector.
Accounting services
Q.70 Japan has heard that India disposes of a mutu al recognition system with Italy with regard to
the qualifications for accountants.  Is this information correct?  If so, please explain the details of this
system.
There is no mutual recognition system in place with Italy as on date.
A Cooperation Agreement was entere d into between The Institute of Chartered Accountants of India
and the Joint International Committee of the CNDC (Consigllo Nazionale Del Dottori
Commercialisti) Italy on December 7, 1998 with the aim of  promoting and strengthening  the
relations between the two Institutes.  This Coopera tion Agreement has led to sharing of information
on accountancy profession by both the institutes and setting up of country desks to disseminate
information on the profession.Horizontal issuesWT/TPR/M/100/Add.1
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Q.71 Concerning the acquisition of land or real es tate, is non-discriminatory treatment ensured in
India?  If not, please indicate what kind of discriminatory treatment exists.
As per the provisions of Foreign Exchange Ma nagement (Acquisition & Transfer of Immovable
Properties in India) Regulations 2000, a person resident outside India who has established in India in
accordance with the Foreign Exchange Management (Establishment in India of Branch or Office or
Other Place of Business) Regulations 2000, a branch, office or other place of business for carrying on
in India any activity, excluding a liaison office, may acquire any immovable property in India whichis necessary for or incidental to carrying on such activity.  It would be incumbent on such person to
comply with all applicable laws, rules, regulations or directions that are in force at the time.  He is
also required to file with the Reserve Bank a declaration on acquisition of immovable property not
later than 90 days from the date of such acquisition.  Such person can transfer by way of mortgage to
an authorized dealer the immovable property as a security for any borrowing.  There are somerestrictions on repatriation of sale proceeds in resp ect of the immovable property.  Citizens of certain
countries (Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal) cannot acquire or
transfer immovable property in India, other than lease not exceeding five years, without the prior
permission of the Reserve Bank.
HONG KONG CHINA
Tariffs
(WT/TPR/S/100, P. 32, Para. 21, P. 35, Para. 25)
Q.72 We are concerned that India still exercises tariff exemptions widely.  The exemptions
introduce unnecessary complexity to the tariff system and increase uncertainty to the trade.  However,
we are glad to note that India intends to simplify its tariff structure to a two-tier one by 2004/05, with
a significant reduction in tariff rates (10% for raw materials, intermediates and components ;  20% for
final products).  We would like to know the status of the simplification plan.
India has been progressively rationalizing and simplifying the tariff structure.  In the Union Budget
for 2002-03 a road map has been announced that by the year 2004-05, the objective would be to have
only two basic rates of customs duties, namely, 10 % covering generally raw materials, intermediates
and components and 20% covering generally final products.  The existing rates are expected to be
adjusted and subsumed in these two basic rates.  Some exceptions on account of WTO bindings orhigher tariffs for agricultural products may also be made.
Similarly, there is also a steady progress towards a simple, stable single rated ad-valorem based duty
structure for central excise (Additional duty on imports is in lieu of Central excise on domestic
products) with a CENVAT rate of 16%.
In the Indian tariff there are 101 exemption notifications.  Out of these, 20 exemption notifications
relate to international agreement and bilateral agreements.  49 notifications pertain to export related
schemes.  3 notifications relate to exemptions on account of IT related commitments.  1 notification
implements the textile agreement commitments.  9 notifications have been issued to allow exemption
for reimport of goods of Indian origin.  18 notifications grant exemption in respect of imports for
donations, relief work etc.  There is one notification which contains 415 entries.
Thus it would be seem that quite a few exemptions are not really product specific exemptions.  It is
also important to note that several of the entries in the exemption notifications are only to fix the
effective level of tariff for particular product or products.  This is necessary on account of the fact thatWT/TPR/M/100/Add.1
Page 30
six digit classification covers group of products.  If a lower rate of tariff is to be fixed for an
individual product, it has to be done only by the so called exemption.  If India had followed 8-digit or
10-digit classification code in the Customs Tariff, such exigencies would have been taken care of by
the tariff itself.  The exemptions are also being phased out gradually.
India is preparing to introduce 8-digit classification in the course of this financial year.
Anti-dumping (AD)
(WT/TPR/S/100, P. 41 ;  Para. 42 ;  & P. 42, Box III.1)
Q.73 We note that there has been a significant increase in the number of AD measures taken by
India in recent years, notably from 19 notified measures in force in 1997 to 131 measures in 2001.
And a total of 250 AD actions have been initiated since 1995.  While we recognize the right of
Members to resort to AD measures consistent with GATT Article VI, we are mindful that the frequent
use of such measures has, to a certain extent, nullified the benefits of trade liberalization.  We areinterested to know the background and reasons for the sharp increase in the use of AD measures in the
past few years.  Has India considered other alternatives before initiating AD measures to address
problems facing its domestic industries, and if so, what are these alternatives?  Apart from the existing
appeal mechanism for reviewing the decisions taken by the Director General of Anti-Dumping and
Allied Duties, are there any other measures taken by the Indian Government to prevent the abusiveuse of AD measures?
Over the last five years, there has been progressive removal of quantitative  restrictions and also the
customs duty on imports have been reduced continuously as a part of the process of liberalization.
The process of liberalization can only be sustained if there is a fair trade and level playing field
between the imported products and  domestic industry.  Whenever the domestic industry adversely
affected by dumping files fully documented petition,  to curb the  unfair trade practice, India has to
take recourse to anti dumping measures after initiating  and conducting investigations in accordancewith the procedures of WTO Agreement on Anti Dump ing practices.  The Agreement stipulates that no
specific action against dumping of exports from another member can be taken except in accordance
with the Agreement.  In the Indian legislation, the appeal against the findings of the Designated
Authority lie with the Custom, Excise & Gold Control Appellate Tribunal(CEGAT).
Labelling and Marking
(WT/TPR/S/100, P. 46, Para. 55)
Q.74 We note that for imports, all packaged products should carry a number of information in
accordance with the Standards of Weights and Measures (Packaged Commodities) Rules.  We would
like to know if similar requirements are imposed on the same or like products produced domestically.
Similarly, India imposes a valid shelf life requirement on imports of edible products to ensure thatexpired food products are not sold in market.  We are interested to know what measures are in place
on domestically produced edible products to attain the same objective.
The requirement in accordance with the Standards of Weights and Measures (Packaged
Commodities) Rules is equally applicable on domesti cally manufactured items.  As regards the issue
of valid shelf life, the requirement to have at least 60% of the valid shelf life at the time of importclearance has been imposed for consumer safety.  This would allow reasonable time for the products
to be marketed in the country before the expiry/best before date is over.  Prevention of Food
Adulteration Rules, 1954 requires domestic producers also to indicate best before date and in case ofWT/TPR/M/100/Add.1
Page 31
expired food articles are marketed, action can be taken under PFA Rules.  This measure has been
adopted based on factual survey report indicating that date expired imported products were beingsold in the domestic market.
Electricity
(WT/TPR/S/100, P. 120-121, Para. 81)
Q.75 It is noted that India has put forth a number of  reforms in the power supply sector in order to
rationalize tariffs, encourage foreign investment, and address problems such as cross-subsidization.We would like to know if India has any measures to deal with the problem of theft and to restructure
the State Electricity Boards (SEBs).
STEPS TAKEN/PROPOSED TO BE TAKEN TO D EAL WITH THE PROBLEMS OF THEFT AND TO
RESTRUCTURE STATE ELECTRICITY BOARDS (SEBs) THEFT The Electricity Bill 2001 which has
been introduced in Lok Sabha in August 2001 seeks to make the penal provisions regarding theft ofelectricity more stringent. The salient features of the Bill in regard to theft of electricity are as under :
- Focus on revenue realization rather than criminal proceedings.
- Provision for compounding of offences.
- On the spot assessment of electricity charges for unauthorized use of electricity by the
assessing officer designated by the State Government.
- Theft punishable with imprisonment.  P unishment provision for abetment of theft.
- Penalties linked to the connected load and quantum of energy and financial gain involved in
theft.
RESTRUCTURING OF BOARDS
The Electricity Bill, 2001 introduced in Parliament in August, 2001 makes an enabling provision for
unbundling of State Electricity Boards (SEBs).  Adequate flexibility has been given to the States to
undertake reforms by adopting the model that be st suits them.  The Bill empowers the State
Government to continue with their SEBs, if they so  desire.  The SEBs would, however, be treated as
deemed State Transmission Ulitily (STU) and a licens ee in terms of the proposed legislation.  Several
States (Orissa, Haryana, Andhra Pradesh, Uttar Pradesh, Karnataka, Rajasthan and Delhi) have
passed their own Reform Laws and unbundled and corporatized their State Electricity Board.  In
Orissa and Delhi distribution has been privatized.
Banking
(WT/TPR/S/100, P. 121, Para. 83 ;  & P. 123, Para. 87)
Q.76 It is noted that the public sector controls ab out 80% of India's total bank assets.  Would India
consider encouraging more foreign participation, for example, by relaxing the cap for FDI in a bank to
more than 49% ;  and by extending the exemption of overseas banking units from minimum capital
asset ratio and statutory lending requirements beyond the special economic zones?
Permitting FDI up to 49% in banking sector under au tomatic route subject to certain stipulations was
only recently announced in February 2002.  India has also announced intention to allow subsidiariesWT/TPR/M/100/Add.1
Page 32
of foreign banks guidelines for which are under preparation.  The foreign bank would thus get the
option of going for FDI investment in Indian banks or float their own subsidiaries.  Prescription ofminimum capital adequacy ratio in relation to risk weighted assets ensures a level playing field for
both Indian banks and foreign banks operating in India and to ensure that the banks operating in
India possess adequate capital funds to cope with exposure norms and growth in risk weighted assets.
Such linkages exist in varying forms in all the countries where Indian banks have their presence.  The
priority sector lending requirements have been tailored taking into account the geographic spreadand other functional differences between foreign bank s and Indian banks.  For instance, while foreign
banks are not required to lend 18% of their credit to agriculture, their performance towards export
credit is reckoned for the purpose of compliance with priority sector lending.
EUROPEAN UNION
Report by the Government (WT/TPR/G/100)
I. INTRODUCTION
(1) I NDIA 'S ECONOMIC PERFORMANCE AT A GLANCE
Q.77 (para. 4) There is a feeling that there are problems with India's statistical data .  For instance,
earlier the growth for 2000-01 was given at 5.8% (as well as in the Government report) .  Suddenly,
the contribution originating from non-bank financial institutions was lowered and the EconomicSurvey 2001-02, has revised the growth for 2000-01 to 4% .  How reliable is, therefore, the
information given by the Government and are any steps being taken to prevent such drastic revision in
the future?
The estimates of national income are released by Central Statistical Organization for every financial
year during January/February months of the corresponding financial year.  These advance estimates
are further revised as updated data keeps on flowing from source agencies.  For the year 2000-01, the
figures for annual income had to be scaled down substantially on account of downward revision inrespect of agricultural production of several products, steep fall in the growth of business of non-
banking financial institutions, due to tightening of  prudential norms by RBI and introduction of RBI
registration process for acceptance of public deposits by NBFCs.
Efforts are being made to improve the data avail ability position as well as the quality of the data
presently available for compiling the national accounts from various data sources.  It may bementioned that India has subscribed to the Standar d Data Dissemination System (SDDS) of the IMF
and is one of the few developing countries that have complied fully with all the data requirements
under SDDS.
(3) I
NDIAS ' FOREIGN TRADE PERFORMANCE DURING LAST FOUR YEARS
Q.78 (para. 8) We note that India still has a tiny share of 0.7% in world exports.  What domestic
policy choices and factors has India identified as lying behind this low level of participation?  What
lessons have been drawn from this and what steps are being taken to increase its share in world trade?
India's merchandise export share in world export has increased from 0.41 in 1992-93 to 0.6% in
1998-99 and to 0.7% in 2001.  Our aim is to achieve 1% share in world export by 2006-07.  Towards
this end, a Medium Term Export Strategy(MTES), for the period 2002-2007, has been announced.The Medium Term Export Strategy (MTES)  gives a road map for the export sector by giving macro &WT/TPR/M/100/Add.1
Page 33
sector-wise strategies to increase India’s share of merchandise exports to 1% of World exports by
2006-07.  MTES is available at the website of the Department of Commerce at www.commin.nic.in
II. KEY DEVELOPMENTS IN TRADE AND ECONOMIC POLICY SINCE THE LAST 
REVIEW
(4) R EFORM IN TAX ADMINISTRATION
Q.79 (para. 18) The report states that as for customs duties, India has progressively reduced the
peak rates to 30% in 2002.  We believe that the notion of the "peak duty" is a misnomer as the peak in2001-02 was 210% and has now become 182% in 2002-03.  There are indeed a number of rates in the
2002-03 budget (from 182% to 5%, with 30% being the moderate rate).  The term for the so-called
"peak duty" of 30% should rather be "most common rate" as about 70% of items are concerned.  Can
India please confirm that the announced general reduction in customs tariffs to 30% has taken place?
Yes, the reduction in peak rate to 30% has taken place.Q.80 The stated goal by the government is to mo ve towards a two basic rate duty regime of 20%
and 10% by the year 2004-05 for non-agricultural products.  What further efforts in cutting down the
number of rates as well as lowering the number of exemptions from import duties does India intend to
make in order to meet this objective?
Please see answer to Q.72.Q.81 (para. 21) We understand that India has postponed the much awaited VAT regime to 2003.
However, the original deadline to introduce VAT was 1st April 2001.  Will India be able to meet its
deadline of 1 April 2003?
An Empowered Committee of State Finance Ministers has been constituted for deliberating upon all
aspects of domestic trade tax reforms including implementation of VAT.  The Committee has decided
that all States  will replace the present Sales Tax regime with a VAT regime with effect from
1 April 2003.  Pursuant to this, time-bound milestone have been fixed for drafting of legislation,finalization of rules and regulations, framing of common guidelines, training of dealers/traders,
computerization, strategy/design and publicity so th at the deadline is met.  The Union Government is
acting as a facilitator and co-ordinator in this endeavour and is providing all necessary assistance to
the State Governments.
(8) E
XCHANGE MARKET REFORMS
Q.82 (para. 27) There has been considerable debate in India on the RBI's decision to allow a more
"market-determined exchange rate" of the Indian Rupee, by holding on to "excessive foreign
exchange reserves" .  This has also had the effect of making imports costlier vis-à-vis exports .  Experts
are of the view that in adopting an extremely cautious monetary policy stance, economic growth is
likely to be a major casualty .  What is the Government's view on this? Will not a greater market-
determined exchange rate lead to greater exports as well, as import-led export growth too is getting
affected?
The exchange rate management policy continues its fo cus on smoothening excessive volatility in the
exchange rate with no fixed rate target, while allowing the underlying demand and supply conditions
to determine the exchange rate movements  over a period in an orderly way.  Towards this end, theRBI monitors closely the developments in the financial markets at home and abroad and carefullyWT/TPR/M/100/Add.1
Page 34
coordinates its market operations with suitable monetary, regulatory and other measures, as
considered necessary from time to time.
(11) L IBERALIZATION IN INSURANCE SECTOR
Q.83 (para. 30) Given the Insurance Act of 1999, what kind of cross-border provision of insurance
services is currently allowed?  Is there any plan to increase the current 26% limitation on foreign
shareholding?
The insurance sector in India has been opened up to private Indian insurance companies, which can
have foreign equity up to 26%.  At present, there is no proposal to increase the percentage of foreign
equity in Indian insurance companies.  Please also see answer to Q.25.
(14) R EFORM OF CONTROL SYSTEMS
(v) Petroleum sector
Q.84 (para. 33) Though the administered price mechanism has been dismantled from 1 April 2002,
the recent price hike of petro-products gives the impression that prices of these products are still
dependent on government decrees and are still not “market-determined”? Consequently, is the
government still subsidizing this sector?
With the dismantling of Administered Pricing Mechanism (APM), the pricing of all petroleum
products, except for Kerosene for Public Distribution and packed LPG for domestic consumption, hasbecome market-determined with effect from 1
st April 2002.   However, with a view to facilitate a
smooth transition from the APM regime to free market scenario, the oil PSUs had agreed to maintain
the prices of petrol and diesel for a period of three months beyond 1 March 2002, when the prices
were last revised.  As the period of three months was over on 31 May 2002, the oil companies hiked
the prices with effect from 4th June 2002 in line with the international prices.  With a view to contain
the hike, the Government simultaneously effected 2% excise duty reduction on petrol and diesel with
effect from 4 June 2002.  The prices of petrol and diesel are likely to be revised by the oil companiesin future on a regular basis in line with the international prices.  As per the Government decision,
Kerosene for Public Distribution and packed LPG for domestic consumption are being subsidized
through the Government budget.  This subsidy would be phased out in the next three to five years.
(17) P
RIVATIZATION OF PUBLIC SECTOR UNITS
Q.85 (para. 42) The recent interference by senior Government Ministers and ruling party leaders
with regard to VSNL, a recently disinvested PSU, on investment of Rs 1,200 crores (280 million Euro
approx.) in a group company, may discourage potential investors in the disinvestments process .  How
does the Government intend to tackle this problem?
The Government has a well-defined and transparent policy of disinvestment of its equity stake in
Public Sector Undertakings (PSUs).  The main idea behind disinvestment of equity stake in PSUs is to
bring down Government equity stake to the level of 26% or less and transferring management control
to the Strategic Partner.  This is done in order to allow sufficient freedom to the company to run
professionally under overall guidance of the Board of Directors.
Government typically, however, has to address certain concerns, which can be summarized as under:
- Protection against asset stripping by the Strategic Partner.WT/TPR/M/100/Add.1
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- Protection of employees, post-disinvestment.
- Exit options for the balance shares held by government of India.- A reasonable Lock-in period for the Strategic Partner.
In order to address the above concerns, government retains certain affirmative veto rights in the
agreement which ensures that decision on such items are taken only if the Government nominee
Director gives his affirmative vote.  It is the intention of Government clearly, however, to allow the
new management to function freely under the overall superintendence, guidance and control of Boardof Directors.  Therefore , normal business decisions including investment decisions are taken by the
Board of Directors keeping in view the overall objective and interests of the company.  Government is
represented by its nominee Directors in the Board of Directors.  Exchange of views and especially in
important investment decisions can and do take place in the normal course of business but ultimately
the decisions making process strictly has to follow the provisions of company law and the provisionsof the Shareholders/Share Purchase Agreement.
In over 30 disinvestment cases, management post-disinvestment is going on smoothly.  Considering
the volume of response from the bidders in recent  cases where Expression of interest(EOI) have been
invited for acquisition of equity stake in PSUs, it is clear that potential investors have felt very much
encouraged to participate in the disinvestment process.
(18) I
MPEDIMENTS TO THE GROWTH OF INDIA ’S INTERNATIONAL TRADE
Q.86 (para. 43) The Government Procurement Regime is declared to be a trade barrier faced by
Indian products and suppliers in foreign procurement .  Would India consider to join the WTO
plurilateral agreement on government procurement (GPA) as a way to eliminate these barriers? Is
India ready to explore the preferential treatmen t foreseen in Art. V of the GPA to developing
countries?
No, there is no proposal at present for India to join the WTO Plurilateral Agreement on Government
Procurement (GPA).
III. INDIA AND THE WTO
(4) S ERVICES
Q.87 Neither the report by the government nor the one produced by the Secretariat contain a
section or chapter on professional services .  Taking into account the low level of commitments
undertaken by India in this sector, the EC would appreciate information on this sector, where the level
of market access currently provided to WTO Members is clearly indicated and special consideration is
given to any recent policy changes that could have taken place.
As per W/120, Professional services cover a number of sub-sectors.  India has taken specific
commitments in Engineering Services (CPC 8672)  which can be delivered under Mode 3 through
incorporation with a foreign equity ceiling of 51%.  Under Mode 4, the professionals are allowed to
provide service as per the Horizontal Commitments taken by India.   They are allowed entry and stay
for a maximum period of one year extendable wi th permission for a maximum of three months.WT/TPR/M/100/Add.1
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Report by the Secretariat (WT/TPR/S/100)
III. TRADE POLICIES AND PRACTICES BY MEASURE(2) M
EASURES DIRECTLY AFFECTING IMPORTS
Q.88 The EU continues to have concerns with I ndia's taxation system on a number of products that
are subject to GATT Article XX and XXI import restrictions .  We would welcome an indication of
when India plans to bring justification of these measures as regards their WTO commitments.
India has already removed all the import restricti ons being maintained on account of balance-of-
payment (BoP) reasons.  The list of products which are restricted for imports under Article XX-XXI
exceptions were notified to WTO in 1997.  This list is being reviewed from time to time.  83 items were
removed from this list prior to 31 March 2002 and restrictions on 63 more items have been removed
on 31 March  2002.
(ii) Customs valuation and clearance
Q.89 (para. 9) In spite of the efforts to speed up customs procedures detrimental delays in customs
clearance for foodstuffs have been reported, in particular due to customs inspection and testing
procedures.  Could India please indicate what kind of measures it intends to take in order to speed up
inspection procedures and to facilitate customs clearance for perishable goods?
In terms of DGFT's notification No. 3(RE-2001)/1997-2002, dated 31 March 2001, Customs has to
ensure compliance of the provisions of the Prevention of Food Adulteration Act, 1954 before
clearance of a consignment of food items.  Depart ment of Revenue had issued a circular prescribing
testing of all the consignments of food items.  Ho wever, considering the difficulties faced by importers
such as hotels, restaurants etc. importing peris hables for self consumption, such imports have been
allowed to be cleared without any testing.
Under the existing procedure, consignment of import ed food item is being referred to Port Health
Officer for his no objection.  He inspects the samp le and draws the sample.  Such samples are sent to
Central Food Laboratories or other laboratories au thorized by the Directorate General of Health
Services for testing for compliance of the conditions of PFA.  As regards measures to speed up
inspection procedures, Ministry of Health has been considering to nominate some more laboratories
for testing of food items under the PFA Act.
Q.90 The Community has welcomed Indian Customs' "Vision and Strategy" plan for customs
modernization and simplification .  We would be grateful to learn what concrete simplification
measures based on that strategy are now in the pipeline and with what timeframes.
Indian Customs has taken a number of measures to simplify procedures.  Computerization of Customs
formations has been taken in a very big way.  ED I has been installed in all the major ports, major
airports and some of the ICDs for processing of declaration of import and export declarations.Introduction of EDI has helped in reducing the pape rwork associated with the clearance of export
and imported goods and transaction time for clearance of goods has been reduced considerably.  A
number of new ICDs/Container freight stations ha ve been set up in the hinterland and at the port
towns to reduce congestion at the ports and to allow importers/exporters to take clearance of goods at
their doorsteps.WT/TPR/M/100/Add.1
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The procedure for transhipment of imported cargo from the gateway ports to other ports/ICDs/CFSs
has been simplified.  For issuance of permission for transhipment from gateway port, a single window
system has been introduced, where applications for transhipment are processed expeditiously with the
help of computer.  All Central as well as Stat e Public Sector Undertakings and custodians of
ICDs/CFSs, have been exempted from the requirement of bank guarantee for undertaking
transhipment of imported cargo from the gateway ports of ICDs/CFSs.  Further, the compulsory
sealing of containers by Customs before transhipment has been dispensed with.
To reduce the transaction cost, a procedure has been prescribed for consolidation of Less than
container load(LCL) cargo at the gateway ports.  Under the scheme, the LCL cargo cleared at the
ICDs/CFSs are stuffed in a container irrespective of destination or shipping line.  After stuffing,
containers are taken to gateway port, where containers are opened and segregated and re-stuffed
shipping line and destination wise.  Containers carrying imported LCL cargo are allowed to be de-stuffed at the gateway ports.  Thereafter, goods are segregated and stuffed destination-wise for
onward movement to ports/ICDs/CFSs.
A procedure for movement of export cargo from IC Ds/CFSs/factories to gateway ports/airports by
trucks has been introduced for faster movement of cargo.  A procedure has been introduced for
carriage of imported cargo from one port to another port by vessels as also by rail.
The working hours for Customs at the Aircargo Co mplexes has been increased to allow clearance of
imported/export cargo from 8.00 A.M. to 10.00 P.M. on working days and from 10.00 A.M. to
5.00 P.M. on holidays.
Regulations have been framed to allow import and export through the courier mode.  The Customs
clearance facility for items imported and exported through courier mode is presently available at
Delhi, Chennai, Kolkata, Mumbai, Ahmedabad, Jai pur, Bangalore & Hyderabad airports and to land
customs stations at Petrapole and Gojadanga in West Bengal.  As soon as goods arrive, these are
cleared by Customs on observance of simple formalities by the courier companies.  The
importer/exporter or his representation need not come to Customs for taking clearance.
(iii) Tariffs
Q.91 We would like to receive an indication if India intends to increase the share of bound tariff
lines for non-agricultural products and reduce at the same time the gap between bound and appliedtariffs?
The issue regarding increase in the number of boun d tariff lines is a subject matter for the ongoing
negotiations on Market Access for non-agricultural Products.  India would not like to offer any
comments on this issue at this stage.  Reply to Q.159 is also relevant.
As for applied tariffs, reference may be made to the reply given to Q.4 posed by Switzerland.
Q.92 The Indian tariff structure is composed of many tariff exemptions and additional or special
tariffs .  Does India see any possibility to simplify the tariff structure thus contributing to more
transparency?
Please see answer to Q.72.WT/TPR/M/100/Add.1
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(vii) Additional and special additional duties
Q.93 (para. 31) It is stated in the report that it is not clear whether the additional duty actually
imposed on each imported item corresponds to the excise tax levied on that item .  In particular, with
regard to wines and spirits, imported spirits are subject to higher levels of taxation than the domestic
product, and we would welcome an indication of wh en this discrimination will be removed and how
India intends to bring its import regime for spirits into conformity with its international obligations .  Is
there any fixed time schedule for those changes?
The additional duty on wines and spirits, has been prescribed after taking into account the various
levies imposed by State governments on manufacture of liquor in their territories.  It will not be
correct to state that the present rate imposed on all imported liquor is higher than the excise duty
applicable on domestic liquor in different States.
Q.94 (para. 32) The SAD is purportedly applied to imported spirits in lieu of Sales Tax .  However,
in practice, imported products are also liable to Sales Taxes at the appropriate rates in most Indian
States .  Does India have any intention or time-table to remove the Special Additional Duty (SAD)?
Could India please comment on this?
The objective behind the imposition of Special add itional duty of customs (SAD) @ 4% on imported
goods is to neutralise the impact of local levies su ch as sales tax, turnover tax etc. leviable on
domestically produced goods and to provide a level playing field to the domestically produced goods
vis-à-vis imported goods.  The floor rates of sales tax levied by the States are 4%, 8%, 12% and 20%
for various types of goods.  The rate of Central Sales Tax applicable to inter-State sales is also 4%.
Thus the levy of SAD does not completely neutralise the effect of local sales tax applicable to
domestically produced goods but only partially does so.  There is no plan at present to phase out or
remove SAD.
At the time of the imposition of the levy in 1998, traders were kept out of the purview of the levy since
goods imported for trading (i.e subsequent sale) woul d have been levied sales tax at the time of the
sale.  However it was noticed that goods were impo rted for trading , but from areas which had a sales
tax exemption , so as to avoid both sales tax and SAD.  There were also instances of companies
resorting to high seas sales in order to avoid the levy.  Further , there were some instances of duty
anomalies wherein the final product when imported for sale , was cheaper than the inputs whenimported for manufacture of the final product, on acc ount of SAD.  Keeping all these factors in mind,
the imposition of this levy was made across the board in 2000.
(viii) Import prohibitions, restrictions, and licensing
Q.95 (para. 36) Could India explain why it request s more stringent standards on imported second-
hand cars than imposed on domestic cars?"
Certain regulations have been prescribed on the im port of new and second hand or used vehicles on
31.03.2001, in order to ensure consumer protection, road safety and pollution control.  These
conditions have been imposed for complying with th e provisions of the Central Motor Vehicles Act,
1988 and the Rules made there under, which are equally applicable on domestically produced
vehicles.  The condition of used/second hand vehicles more than 3 years old not being allowed forimport has been imposed because of non-availability of spare parts and lack of service chain for these
old vehicles, which would jeopardize consumer protection and  road safety.WT/TPR/M/100/Add.1
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(ix) Minimum import prices
Q.96 (para. 38) We have been reported that 'de-facto' minimum prices on the imports of ceramic
tiles exist .  Could India please inform if and when it does intend to eliminate this practice?
Ceramic tiles as classified under code no. 69.08 of ITC(HS) Classifications of Export and Import
Items 2002-2007 are freely importable.  No mini mum prices exist on imports of such tiles.
Q.97 (para. 38) Could India please explain th e system of minimum import prices (including
product coverage) applied for the imports of primary steel products?
By Ministry of Commerce (DGFT) Notification No. 35 (RE-98) dated 11.12.1998,  floor prices were
fixed on import of prime steel items.  However, Government of India decided to remove minimum
floor price restriction on import of prime steel item s and accordingly, vide Notification No. 31 dated
1.11.99, price restrictions on prime items we re withdrawn with effect from 1.1.2000.
But this withdrawal Notification has been challenged before Hon’ble High Court of Kolkata and the
matter is sub judice.
Q.98 In addition, minimum import prices, so-called floor prices are applied for the imports of
marble .  Could India please indicate whether there is any time schedule for the elimination of this
measure?
Marble blocks as classified under code no. 68.02 of ITC (HS) Classifications of Export and Import
Items 2002-2007 are freely importable.  No mini mum prices exist on imports of such items.
(xi) Contingency measures
Q.99 (para. 41) Can India please explain how the independence of the Appellate Tribunal (also
known as the Customs, Excise and Gold (Control ) Appellate Tribunal) from the Directorate General
of Anti-Dumping and Allied Duties is ensured?
Customs, Excise & Gold (Control) Appellate Tribu nal (CEGAT) constituted under Section 129 of the
Customs Act, 1962, consists of judicial and technical members who exercise the powers to  dischargethe functions conferred on the Appellate Tribunal by the Act.  The Tribunal is independent of Dept. of
Commerce and has no administrative interaction wi th the Directorate General of Anti Dumping and
Allied Duties.
Designated Authority is appointed under Customs Tariff Act, 1975 as amended in 1995 and the
Customs Tariff (Identification, Assessment and Collect ion of Anti Dumping Duty on Dumped Articles
and for Determination of Injury) Rules, 1995.  At present, an officer of the rank of Additional
Secretary in the Department of Commerce, functions as Designated Authority  and is assisted by
Directorate General of Anti Dumping & Allied Duties(DGAD) for conducting investigations.  Please
also see answer to Q.175.
Q.100 (Box III.1) Can India please explain what are the criteria used to initiate an anti-dumping
investigation by the Directorate General of Anti-Dumping and Allied Duties, in particular with regard
to the acceptance of complaints? When does the Directorate General of Anti-Dumping and Allied
Duties consider there is evidence regarding dumping or injury? What are the consequences of
preliminary findings not being made within the applicable deadline? Final findings must be notified to
the Central Government within a period of one year from initiation of the investigation, although thisWT/TPR/M/100/Add.1
Page 40
period may be extended by the Central Government for a period of six months .  Can India please
explain on what grounds such an extension would occur? Regarding definitive anti-dumping duties,could India explain when and on what basis the Dire ctorate can extend the applicable five-year period
for periods of five years?
Investigations into complaints of dumping are initiated by the Designated Authority only on receipt of
adequate and sufficient evidence of dumping, injury and causal link.  This is prescribed under Rules.
As per Rules, the deadline for completion of investigation is one year extendable by the Central
Government  for a period of  6 months.  The extension is normally  sought in case the investigation is
not completed within a period of 12 months which may be on account of certain  legal complications
or other  conditions arising in the course of inve stigations necessitating seeking of extension of time.
In case the investigations is not completed within   stipulated deadline, the initiation notification
lapses automatically.  The applicable five year period as per the Customs Tariff Act,  for the antidumping duties can extend for another period of five years in case the Designated Authority
determines  after due investigation that  discontinuation of the duties will lead to  recurrence of
dumping and injury to the domestic industry and accordingly, recommends continuation of the duties
for another period of five years.
Q.101 (para. 42) Since India passed its legislation on Anti-dumping, it has become a major user of
this instrument .  Can India please explain the increase on AD measures since 1997 .  Nearly 40% of
the new AD cases relate to China and the European Union .  Could India provide any explanations for
this situation?
There have been progressive removal of quantitative restrictions over the last five years by India and
also customs duties  on imports have been re duced continuously as a part of the process of
liberalization.  However the process of liberalization can be sustained only if there is fair trade and
level playing field between the imported products and  domestic industry.  When the domestic industry
adversely affected by dumping files fully documented petition,  investigations are conducted in
accordance with the procedures of WTO Agreement on Anti Dumping practices and measures are
taken accordingly.
Q.102 (para. 44) Can India please explain the criteria on basis of which a finding of "serious injury
from increased imports" would be determined by Indian authorities?
The determination of serious injury or threat thereof has been defined in Section 8 B of the Customs
Tariff Act, 1975 as an injury causing significant overall impairment in the position of a domestic
industry and threat of serious injury means a clea r and imminent danger of serious injury.  The
determination of serious injury or threat thereof is made by the Director General (Safeguards) in
accordance with the provisions of the Customs Tariff (Identification and Assessment of Safeguard
Duty) Rules 1997.
The Director General (Safeguards) evaluates all relevant factors of an objective and quantifiable
nature having a bearing on the situation of the domes tic industry, in particular the rate and amount of
the increase in imports of the article concerned in absolute or relative terms, the share of the
domestic market taken by increased imports, changes in the level of sales, production, productivity,
capacity utilization, profits and losses and employment.
The above determination shall not be made unless the investigation demonstrates, on the basis of
objective evidence, the existence of the causal link between increased imports of the articles
concerned and serious injury or threat thereof.  When factors other than increased imports areWT/TPR/M/100/Add.1
Page 41
causing injury to the domestic industry at the same  time, such injury shall not be attributed to
increased imports.
Q.103 (para. 45) The final findings of the Direct or General (Safeguards) for Methylene Chloride
recommended the imposition of safeguard duties .  However, this is yet to be notified .  Can India
please indicate within which timeframe this notification will occur?
The final findings of the DG(Safeguards) has already been notified to the WTO.  The Government has
not yet taken a decision for implementing the recommendations of DG (Safeguards) in this case.  If adecision is taken to impose a safeguard measure this would be notified to the WTO immediately.
(xii) Standards, testing and certification
Q.104 (paras 47–49) It is our understanding that the Bureau of Indian Standards (BIS) is responsible
for drafting and ensuring the implementation of Indian standards as well as assessing their conformity .
The TBT Agreement makes a difference between technical regulations that are mandatory andstandards that are voluntary .  The EU would like to seek clarification on whether the BIS is also
involved in drafting mandatory technical regulations?
Various standards are made mandatorily applicable  on consumer items by the Government i.e
Ministries and Departments through various statutes like Prevention of Food Adulteration(PFA) Act.
As per the TBT Agreement, measures, which are mandatory in application, are known as “technicalregulations”.  BIS being the national standardizi ng body formulating these standards is therefore
directly or indirectly involved in these regulations.
Q.105 (para. 50) The EU is aware that for a group of 133 products conformity assessment and
certification by the BIS is mandatory .  Does India consider that for these 133 products, a difference
between technical regulations and standards in the meaning of the TBT Agreement has been made?
Furthermore, the EU would like to seek clarification on to what degree these standards, for which
mandatory conformity assessment is required, are based on international standards? The EU wouldalso like to hear whether equivalent foreign standards are accepted?
The regulations imposed vide DGFT Notification Nos 44 and 7 dated 24 November 2000 and
31 March 2001 respectively has made the application of Indian quality standards mandatory on
import into India  in respect of 133 items.   Thes e are, therefore, technical regulations as per the
Agreement on TBT.  These requirements are equally applicable to domestic goods and thus compliantwith national treatment requirement.  The possibility of accepting certification according to
equivalent foreign standards in future would depend on any mutual agreement between
Governments/national standardizing bodies.
Q.106 It is our understanding that for these 133 products the BIS is responsible for both drafting the
standards and assessing conformity with them .  The EU would like to seek clarification on how the
division between these different tasks within the BIS is secured? Is there a clear division of
responsibility between the drafting and assessing conf ormity of standards? The EU would also like to
seek clarification on how the costs for the conformity assessment are defined?
The standards formulation and certification are tw o different activities headed by two different
Additional Director Generals in the BIS and therefore there is a clear division betweenresponsibilities of standards formulation and conformity assessment.  BIS is not for profit
organization and the costs are decided accordingly.WT/TPR/M/100/Add.1
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(xv) Government Procurement
Q.107 (para. 57) The Directorate General of Supplies and Disposals (DGS&D) procures goods and
services required on  a recurring basis by central government entities .  What entities are authorized to
make their own purchases without passing throug h the DGS&D? Does the DGS&D charge any fee for
procurement launched on behalf of other entities? Could India transmit to the WTO the 367 recurrent
items usually procured by the DGS&D?
DGS&D concludes rate contracts for common user items to avoid repetitive tendering saving time
and efforts required in the tendering process at different user locations, besides getting economic
rates.  All ad hoc purchases can be made by indivi dual entities.  The DGS&D charges a 0.5% fees for
purchase and 0.5% for inspection of the stores being procured.  List of items under rate contract is
available at http://dgsnd.nic.in/dgsm.htm
Q.108 (para. 59) Limited tenders should include contra ctors that have been granted contracts in the
past:  is this condition limited to purchases of the same good or service or is it extended to any
supplier which may have supplied any good or service to public entities in the past?
For invitation to tender all prospective suppliers are considered including contractors previously
granted contracts.  However, the tenderers meeting the eligibility criterion of a particular
procurement are considered for award of the contract.
Q.109 (para. 59) The last phrase refers to limited and single tenders used for important works .  Is
this an obligation for awarded suppliers to sub-contract or purchase from the DGS&D list of approved
contractors?
DGS&D does not deal with works contracts.
Q.110 (para. 60) What are in detail the obligations imposed to foreign suppliers to be registered with
DGS&D through local agents? What is the legal form of these provisions? Are registrations accepted
at any time? What is the complaint mechanism in case of refusing registration?
The registration criteria followed by DGS&D are the same for domestic manufacturers or foreign
manufacturers.  In the case of foreign m anufacturers, however, the agreement between the
manufacturers and their local agent is examined in deta il to ensure availability of after sale service,
validity of the agreement for the required period etc.  There is no specific or exclusive law for
DGS&D contracts.  All Indian laws apply.  Registrations are accepted at any time and the complaintmechanism is the same for domestic or foreign manufacturers including legal remedies through
courts and recourse to the Central Vigilance Commission.  Details of the grievance redressal
mechanism is available at http://dgsnd.nic.in/pgdmdgsd.htm
Q.111 (para. 62) Could India explain the offset policy applied to foreign bidders in government
procurement?
The Foreign Bidders registered with DGS&D as per prescribed procedures are eligible for award of
rate contract.  Registration details are provided at  http://dgsnd.nic.in/dgs6.htmWT/TPR/M/100/Add.1
Page 43
(3) M EASURES DIRECTLY AFFECTING EXPORTS
(iii) Export taxes
Q.112 (para. 71) We note that India maintains export taxes of 60% on hides, skins, and leathers .  The
measure artificially inflates the world prices of these products and distorts internal competition .
Could India please indicate when it intends to eliminate these taxes?
India has lifted all export restrictions on exports of hides, skins and leathers.  There is no tax on
export of finished leather.  However raw hides & skins  and semi-finished leather are taxed at varyingrates for export purposes.  These taxes are WTO compatible.
(viii) Duty and tax concessions
Q.113 (para. 82) Does India intend to abolish the DE PB Scheme and if yes by when? Is this scheme
WTO compatible?
The DEPB scheme constitutes a permissible drawback scheme in accordance with item (i) Annex I to
the Agreement on Subsidies and Countervailing Measures which permits remission or drawback of
import charges levied on inputs that are consumed  in the production of the exported product.  At
present, DEPB is part of five year EXIM Policy, 2002-2007.
(x) Free trade zones
Q.114 The creation of  free trade zones and export processing zones as a means of mitigating the
adverse impact of import restrictions on exporters' competitiveness could be considered as being trade
distortive.  This is because such zones divert investment away from other regions in India and
potentially from other WTO Members which are unable to set up such zones.  It also belies the
effectiveness of import restrictions for balance-of-payments reasons.  Would India agree that instead
of relying on special zones, lifting its remaining restrictions on imports (except for goods that are
covered by the Article XX exemption) and reduce tariffs could be a better option?
India has removed all QRs, which were being main tained on account of BOP reasons (Art. XVIII of
GATT) w.e.f. 1.4.2001 and no such restrictions are in place.  Hence it is not correct to say that
FTZ/EPZ is a means of mitigating the adverse impact  of import restrictions.  Restrictions are being
maintained on account of Art. XX and XXI of GATT only.
Such zones are set up to address issues of quality infrastructure, most efficient regulatory movement
and as laboratories for testing changes in macro economic policies.  Such zones have been set up inUSA, Canada, Europe and many East European countries.  Hence, it is an accepted strategy for
promoting investment.  India does not agree with th e comment that it leads to diversion of investment
from other regions of India and from other WTO member countries.
(4) M
EASURES AFFECTING PRODUCTION AND TRADE
(ii) Tax measures and other incentives/subsidies
Q.115 (footnote 157) It is mentioned that an additional 5% surcharge is currently levied on the
income tax of resident companies, so that the full rate of corporate tax is 36.75%.  The tax rate on
branches of foreign companies is for the time being 40%.  We would like to know whether the
Government has any plans to bring the corporate ta x rate for foreign companies further down to the
same level with the resident ones.WT/TPR/M/100/Add.1
Page 44
An additional 5% surcharge is levied on both domestic and foreign companies.  This raises the
applicable corporate tax rate to 36.75% for dom estic companies and 42% for foreign companies and
their branches.   This rate on foreign companies was till recently 48% and has been brought down by
the Finance Act, 2002.  The differential between the corporate tax rate on foreign companies vis-à-vis
the domestic companies does not effectively exist, since the shareholders of foreign companies are
generally not taxed in India or are taxed as per the beneficial provisions of the bilateral tax treaty,
whereas the shareholders of domestic companies are liable to pay tax on dividend income at theapplicable tax rates.  At present, the maximum marginal personal income-tax rate is 30% grossed up
by 5% surcharge.  In any case, the rates have been recently brought down and are reasonable in
comparison to tax rates on foreign companies applicable in other countries.
(v) Intellectual Property Rights
(a) Patents
Q.116 Please inform when the Patent (Second Am endment) Bill, 1999 is expected to enter into
force.
Patent (Second Amendment) Bill 1999 has been passed by the Parliament in the month of May 2002.
It is expected to be brought into force shortly after it receives the assent of the President and on
finalization of the subordinate legislation.  The work in this regard is going on.
(b) Trade Marks
Q.117 Under the new Trade Marks Bill 1999, a trade mark is defined as being represented
graphically and capable of distinguishing goods and services of one person from those of others and
as including the shape of goods, their packaging and the combination of colours (section 2(1)) .  Please
explain whether the new Trade Marks Bill allow the registration of single colour marks, of smell
marks and of sound marks .  Can the applicant, in order to overcome the absence of inherent
distinctiveness, invoke acquired distinctiveness through use? If so, what burden will he have to bringin order to prove acquired distinctiveness?
According to Section 2(zb) of the Trade Marks Act, a trade mark means a mark capable of being
represented graphically and which is capable of distinguishing the goods or services of  one person
from those of others and may include shape of  goods, their packaging and combination colours.
Sound and Smell trademarks are not expressly mentioned in the definition of the trade mark but thedefinition of trademark is exhaustive.  However, sound or smell trademark, if it is capable of being
represented graphically and is capable of distinguishing the goods or services of one undertaking from
those of the others, may qualify to be considered as a trademark and consequently qualify for
registration.
As regards the issue whether lack of inherent distinctiveness in a trademark can be overcome by use
of the mark, the broad answer is yes.  But the burden  of evidence would vary from case to case.  The
thumb rule is, the weaker a mark the heavier the burden of evidence.  Also the Registrar under the
provisions of section 18(4) has the power of refusal of trademark even though it may qualify for
registration under section 9.
Q.118 The new Trade Marks Bill introduces, besides certification marks, collective marks .  Please
explain briefly the difference between these two concepts under the Indian law.WT/TPR/M/100/Add.1
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The distinction between certification and collective trademark is that the proprietary rights in a
certified trademark can be acquired by an individual whereas the proprietary rights in a collectivetrademark vests with association of persons using the collective mark.  Secondly, in case of
certification of trademark the proprietor cannot carry on trade in the goods or services certified by
him.  However, there is no such restriction is placed in the case of collective trademark.
Q.119 Section 11(6) and (7) defines a well-k nown mark quoting the WIPO recommendations .
Please explain whether, in order to benefit of an enlarged protection, a well-known trade mark shouldbe i) registered in India and ii) used in India.
As per the provisions of section 11 (a)(i) and (ii) of the Trade Marks Act, 1999 it is not necessary that
either the mark should be registered in India or used in India as a condition to determine whether a
trade mark is well-known.
Q.120 (para. 166) The report mentions that the application will undergo an ex officio  examination on
absolute and relative grounds for refusal before th e trade mark is advertised for opposition means .
Section 11(5) is however unclear whether and to what extent examination on relative grounds for
refusal is maintained before advertisement .  Please clarify.
It may be seen from  section 11(5) of the Trade Marks Act, 1999 that objection under section 11(2) and
11(3) of the Act cannot be raised at the Examination stage.  It should be raised in oppositionproceedings only.
Q.121 The new Trade Marks Bill foresees that a trade mark is liable for cancellation due to non-use
for a continuous period of five years and three months from the date it was entered on the registry .
Please clarify what precisely is the starting date for the calculation of the period of non-use
(application date or registration date) .  Please explain why the term of non-use was brought on a
period of five years and three months .  Please make clear whether a resumed used after a non-
challenged period of five years (and three months) of non-use, will lead to a revival of the exclusive
right.
The date for counting period of non use of 5 years and 3 months will be from the date of actual entry of
the mark in the Register and not the date of application.  Please see section 47(1)(b) of the Trade
Marks Act, 1999.
The period of 5 years and 3 months has been set as a ground for refusal in order to ascertain that the
registered trademark has in fact not been used during that period.  The 3 months margin is provided
for such contingencies as bringing goods bearing the trade mark into the market place, etc.
As regards resumed use after the non challenged period of 5 years and 3 months of non use, this
would save the registered trademark from rectification as the mark cannot then be regarded as a non
used mark for a continuous period of 5 years and 3 months.  However, delay in use of the markbeyond 5 years and 3 months would make the registered trademark vulnerable to rectification
proceedings.
(c) Geographical Indications
Q.122 (para. 172) The report refers to Article 9 of the Geographical Indications of Goods
(Registration and Protection) Act, 1999 (the "Act") which states that a geographical indication the useof which would be contrary to any law cannot be registered .  Please clarify this provision and
illustrate with examples (even if hypothetical).WT/TPR/M/100/Add.1
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Section 9(b) of the GI Act provides for this.  For example, Amritsar is a religious place in Punjab
worshipped by the Sikh community and smoking of cigarettes or consuming of alcohol in that area
hurts the religious feeling of the Sikh community.  If somebody wants to use the name of this place as
a geographical indication for Cigars, for instance, it would be prohibited as being contrary to the Act.
Q.123 (para. 172) The report states that goods cannot be registered as geographical indications if
they are determined to be generic names (…) in their country of origin (Article 9 of the Act) .
Article 26(2) of the Act reads that nothing in the Act shall apply in respect of a geographicalindication with respect to goods for which such geographical indication is identical with the term
customary in common language as the common name of such goods in any part of India on or before
January 1995 .  While Article 26(2) mirrors the language of 24(6) of the TRIPs Agreement, this is not
the case for Article 9 .  Please explain the difference between Article 9 and Article 26(2) as regards
their scope and applicability.
Section 9(f) of the GI Act provides that the Registrar has to determine whether a geographical
indication has become generic based on the evidence produced before him if an issue to that effect is
agitated before him.  Section 26(2) has been incorporated in order to meet India’s obligation under
Article 24(6) of the TRIPS.
Q.124 (para. 174) Please explain why a renewable term of protection of ten years was chosen despite
the fact that the TRIPs Agreement does not prescribe a specific period of protection .  Please also give
details of any fees payable with respect to the renewal of the registration.
It is quite possible that a registered geographical indication may have become generic or have ceased
to be protected in the country of origin.  Therefore, provisions for renewal and rectification have been
incorporated.   The renewal fee is payable as indicated in the Notified Rules.
(d) Copyright
Q.125 (para. 183) The report states that regarding pirated goods enforcement at the border seems to
be weak .  Please state what border control measures are currently in place and what steps are being
taken to prevent the exporting of pirated goods.
Section 11 of the Customs Act, 1962 empower s the Government to prohibit importation and
exportation of goods for the protection of patents, trademarks and copyrights.  Under this section, the
government has issued Noftn. No. 1/Cus/dated 18 January 1964 prohibiting import of goods havingapplied thereto false trademarks within the meaning of Section 77 of the Trade and Merchandise
Marks Act, 1958 and Indian Patent & Design Act, 1911.  Similarly, a notification No. 135 dated 31
December 1960 has been issued prohibiting export of good in violation of Trade and Merchandise
Marks Act, 1958 under section 11(2)(n) of Customs Act, 1962. Customs Department is taking a
number of measures to effectiv ely implement these provisions.
IV. TRADE POLICIES BY SELECTED SECTOR
(3) M
ANUFACTURING
(ii) Textiles and clothing
Q.126 The Secretariat made calculations on the basis of ad valorem  duties only, and writes:  "The
average level of tariff protection may be underestimated" (emphasis added) .  Could India give a
detailed list of additional duties to which it subjects textiles and clothing, including the full content ofWT/TPR/M/100/Add.1
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the alternate rates, of which specific duties? Could then a new calculation be made to reflect the real
level of import protection maintained by India on the textile and clothing sector?
The average level of tariffs overall and in textiles and clothing sector has substantially come down
compared to what it was during the time of last trade policy review.  A number of additional textiles
tariff lines have been bound.  India levies additional duty and special additional duty on imported
goods to neutralise the impact of excise duty (parallel to VAT in certain other countries) and of local
levies such as sales tax, which are levied on domestically, produced goods and to provide a levelplaying field to the domestic manufactures vis-à-vis imported goods.   The additional duty and special
additional duty are applicable to imported goods in various sectors including textiles.  In India’s view
it may not be appropriate to include the additional duty and special additional duty for reflecting the
real level of import protection as such additional duties are also levied on domestic production.
Q.127 Could India please inform about the schedule for future further tariff reduction by India?
Does it have the intention to proceed with such dismantling only within the new negotiations?
As regards the schedule of future tariff reductions India is ready to discuss the issue bilaterally as
well as at the multilateral framework of the WTO.  Please also see answer to Q.159.
NEW ZEALAND
Agriculture
Q.128 New Zealand welcome's the major development in India's trade related reforms in the
removal of all import restrictions maintained for balance-of-payments reasons.  However the
Secretariat report (Chapter IV, para. 11) notes that tariff protection for agricultural products remains
substantially higher than other products and that the average applied tariff has increased from 35
percent in 1997/98 to 41 percent in 2001/05.  India’s tariff structure also reveals a high level of tariff
escalation and a high level of separation between bound and applied tariff rates.  New Zealand hopes
that improvements in these areas will be possible.
How does India justify the relatively high level of  protection afforded to the agricultural
sector especially in light of the low productivity in that sector?
Though the bound rates for primary and processed agricultural products are 100 and 150 per cent,
the applied rates are lower for most of the products.  Agriculture is a way of life for the developing
countries like India having nearly two third of the population dependent on it.  Majority of thispopulation are resource poor and having small farms.  The tariff modulation in consonance with
international price fluctuations at times becomes necessary for their food and livelihood security.
The low productivity is due to application of inadequate resources and technology in farming.  The
highly subsidized agriculture of developed countri es impacts the import competitiveness of domestic
production enhancing the vulnerability of food and livelihood security of domestic farmers.
Q.129 New Zealand is concerned about the extent of high tariff barriers that are faced by agricultural
and forestry commodities and in particular by processed agricultural and forestry products.  We
believe that these barriers are import inhibitors, have a negative impact on higher-value-added exports
from developing and developed countries, and create the potential for trade diversion.WT/TPR/M/100/Add.1
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- In view of India's commitment to a more open market economy, what steps is India taking to
reduce applied and bound tariffs for agricultural and forestry commodities and processedproducts?
India has maintained applied tariffs at levels much lower than the bound levels.  India has also
removed the regime of QR on imports of agricultural commodities.  Removal of QR regime also
enables provision of market access to agricultural products, processed food products and forestry
products of developed countries.  This exhibits our commitments to open the markets.  At the sametime, since agriculture is the major source of income  for a vast majority of India's population, India is
careful in ensuring that their incomes are not adversely affected.  Erosion of income of our farmers
can take place, on account of depressed prices of agricultural commodities in the international
markets and due to high domestic support and export subsidies being provided by the OECD
countries.
Q.130 The Secretariat notes that India's agriculture policy has been largely driven by the need to
eradicate hunger and ensure that domestic supplies are sufficient to meet this demand (i.e. self-
sufficiency).  However, as noted in the Secretariat Report (Chapter IV, para. 7 the distortions created
by higher support prices and input subsidies (w hich have led to increased output) are only now
becoming evident;  subsidies have continued to grow  and are considered to be fiscally unsustainable;
food stocks have increased because of high support prices for producers and now pose problems of
storage and higher food subsidy costs;  and misuse  of inputs have led to environmental problems.
New Zealand agrees that food security is important, but we also believe that true food security can
only be obtained through an open international market  rather than striving for self-sufficiency, and
that isolating markets leads to greater climatic and input risks, and an inefficient global market.
- In view of India's commitment to a more open market economy and the current problems
India faces due to its current policy of striving to achieve self sufficiency in food stuffs, whatsteps is India taking to rectify these problems?
The Indian agriculture is largely dependent on weather and its variability cause fluctuations in
production of food grains and their availability.  Hence, India cannot afford to be complacent about
the food self-sufficiency.  Moreover, the gap between the domestic supply and demand is not
substantial considering the issue of food security that India has to address for its large population.Further, India has to address the issue of micro food security besides macro food security.
In the international markets, prices of agricultural commodities are depressed, on account of heavy
domestic support and export subsidies being provided by the OECD countries.  If distortions in the
international markets  and non tariff measures against Indian exporters of agricultural products are
removed, Indian agricultural products can find export markets and relying on market signals, canproduce those products for which India has a comparative advantage.  At the domestic level a number
of steps have been taken recently to develop market based instruments to stabilize farmers' income.
These include liberalization of domestic and external trade and introduction of futures in agricultural
trade.
Q.131 The Secretariat Report, (Chapter IV, para. 29), comments that India’s agricultural policy has
focused on securing increased production through subsidies of inputs rather than through increasing
investment.  New Zealand believes that there are superior means of providing support to producers
than through the use of trade distorting support measures such as infrastructural and other green box
policies.
- Has India considered moving towards such policies?WT/TPR/M/100/Add.1
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The investment for infrastructure in agriculture is essential for improving the farming efficiencies and
post harvest management.  Due to low resource base, the magnitude of capital formation inagriculture has not picked up.  The economic condition of farmers is also not that strong to accelerate
their private investment.  Hence, the focus on infrastructure development is necessary for overall
development of the agriculture sector.  It may be mentioned here that such supports covered in the
Green Box are less trade distorting than the direct payments and production limiting subsidies.
Tariffs
Q.132 The Secretariat Report (Chapt er III, para. 11) notes that, although the average tariff rates have
declined from 35% to 32.3% since the last Review  of India, the applied MFN tariff continues to
provide a high level of protection for Indian industry.  With its numerous exemptions, the tariff is also
a complex and consequently opaque instrument.
(i) What criteria are used by India to assess whether tariffs, including specific duties, are set at
appropriate levels?
The criteria used to set tariffs take into account a number of parameters including inter alia bindings,
the need for a phased duty reduction as part of the process of fiscal reforms and the level of
protection needed by the domestic industry from time to time.
(ii) Are tariffs, including specific duties, subject to regular review?  If so, at what intervals?An annual comprehensive review of tariffs takes pl ace prior to the presentation of the Union Budget.
Reviews are also undertaken at other time depend ing on the national and international situation with
respect to any particular commodity or sector.
Q.133 The Secretariat Report notes (Chapter III, para. 11) that the average tariff rate is expected to
decline further to 29%, if current budgetary proposals are approved by Parliament.  We note,
however, that tariffs on dairy products were reduced in the 28 February 2002 budget from 35% to
30%, only to be increased to 40% on 26 April 2002.
(i) What procedures are in place to ensure that transparency and objectivity is carried out with
tariff increases?
The tariffs in India are generally taking a downwar d trend.  Increases, if any, are considered after
examining in detail the situation necessitating the change including through consultations as
necessary with interested groups.
(ii) Does India have any programmes in place to reduce tariff peaks and/or tariff escalation?  Is
India following a programme of tariff simplification?
Tariff peaks in India, if taken as three times the average tariff, exists in about one per cent of the tariff
lines.  Yes, India is following a programme of tariff simplification in line with the road map for a
regime based on two rates by the year 2004-05.  Please also refer to the answer to Q.72.
(iii) Would India please clarify the domestic process for other governments and private businesses
to raise questions and concerns regarding tariff setting and apparent tariff anomalies?
The tariffs in India are generally being progressively reduced.  Increases, if any, are considered after
examining the situation necessitating the change.  Any entity that wishes to represent about tariffWT/TPR/M/100/Add.1
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levels or anomalies are free to correspond with  the relevant wing of the Government.  Any
representation received is examined and considered suitably.
(iv) Is the Indian Government on track to reduce the average tariff rate to 29%?
India has reduced the peak tariff from 35% to 30% this year.
Sanitary and phytosanitary measures
Q.134 The Secretariat Report notes (Chapter III, para. 45) India's Sanitary and Phytosanitary
measures affecting imports.  In the past, New Z ealand has had some problems contacting India's
designated SPS Contact Point and obtaining all the information on India's SPS requirements for
forestry and plant exports.
- Could India please clarify the correct SPS Contact Point and confirm that it can assist in the
provision of current phytosanitary requirements for plant and forestry products.
New Zealand also notes that a notification was received in 2001 indicating that India was considering
the obligation for all commodities to require an import permit.
Plant Protection Division,  Departme nt of Agriculture and Cooperation, Government of India  is the
enquiry point  for India with regard to Agreement on SPS.  As regards the issue of import permits, it
may be noted that import of all primary agricultur al products has been made subject to a Bio Security
& Sanitary-Phyto Sanitary import permit, to be issued by Department of Agriculture and Co-
operation, as per conditions of Plants, Fruits and Seeds (Regulation of Import into India) Order,
1989.  The permit is issued based on Import Risk Analysis of the product, conducted on scientific
principles, in accordance with the Agreement on the Application of Sanitary and Phyto-Sanitary
measures.  The Import Risk Analysis is based on various scientific principles, including inter alia,
(a) the type of pests etc. known to be associated with the particular product in the exporting
country;
(b) the organisms already established in India;  and(c) the potential impact of such organisms on India’s international trade.
Q.135 We would be grateful if  India could clarif y whether any decision has been taken in this
context.  In particular, could India clarify wh at products require an import permit and what the
process is for obtaining an import permit?
Import of all primary agricultural products  are su bject to a Bio Security & Sanitary-Phyto Sanitary
import permit, to be issued by Department of Agriculture and Co-operation, as per conditions of
Plants, Fruits and Seeds (Regulation of Import into India) Order, 1989.   The permit will be based on
Import Risk Analysis of the product, to be conducted on scientific principles, in accordance with the
Agreement on the Application of Sanitary and Phyto-Sanitary measures.  The Import Risk Analysis
will be conducted based on various scientific principles, including inter alia,
(a) the type of pests etc. known to be associated with the particular product in the exporting
country;
(b) the organisms already established in India;  andWT/TPR/M/100/Add.1
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(c) the potential impact of such organisms on India’s international trade.
The measure is as per the Agreement on the Application of Sanitary and Phytosanitary Measures.  An
application has to be made to the Ministry of  Agriculture for obtaining an import permit.
Additional/special additional duties
Q.136 The Secretariat Report (Chapt er III paras 31-32) notes that the complexity of the excise tax
structure is such that there is ample scope for the mi sclassification of items.  Nor is it clear that the
special additional duties designed to ensure imports are taxed at the same level as domestic productsdo indeed achieve equity.
How does India propose to minimize such discrepancies?
The schedule to the Central Excise tariff is based on the harmonized system of nomenclature of WCO.
Hence classification of goods is done on an internationally accepted basis of classification and rules
of interpretation.  Further with a single CENVAT rate of 16% accounting for more than 85% of thetotal revenue from ad valorem duties, and a single special excise duty of 16% there is very little scope
for classification dispute or differential taxation between imported and domestic products.
Geographical Indications
Q.137 The Secretariat report (chapter III, para. 175) notes that India considers the additional
protection for geographical indicators under Article 23 of the TRIPS Agreement should be extendedto products other that wines and sprits.
India has indicated an interest in terms such as Darjeeling tea, Alphonso mangoes an
Kholapuri slippers.  We would be interested to know, what, if any, specific problems has India
encountered in implementing the current level of protection (article 22) given to these products?
There have been several instances of use of these geographical indications in conjunction with terms
such as ‘kind’,  ‘type’, ‘superior’ or in translation even where true source of origin is indicated.  In
such cases, it is found that the protection available in Article 22 is not adequate.
Customs Valuation and Clearance
Q.138 The Secretariat Report (Chapter  III, para. 9) notes that delays  continue to be experienced in
customs clearances due to the complexity of the tariff and exemptions, which may vary according to
product, user, or specific export-promotion programme.  We note from the Report that India has taken
a number of steps to address these delays.
(i) How effective have these steps been in addressing delays in customs clearance?
(ii) What steps are India taking to address consistency and transparency in customs rulings in
clearance procedures?
(iii) What other areas has India identified as causing delays in customs clearance?
In the past few years, a number of steps has been taken  to simplify the tariff structure.  Some of these
measures include (i) reduction in number of slabs of  duty rates, (ii) reduction in number of exemption
notifications, and (iii) uniformity in rates of duty in chapters etc.  These measures have considerably
reduced disputes in classification and delays in Customs clearance.WT/TPR/M/100/Add.1
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The Government is in the process of establishi ng the EDI connectivity am ong Customs formations,
which would not only bring about transparency in Customs clearance procedures, but also uniformityin assessment practice.  However, a number of Cust oms formations in India are still not under EDI
and efforts are under way  to implement  EDI at all places.
To eliminate delays in various activities undert aken by Customs, a number of procedures has been
simplified.  Some of the simplification measures undertaken in the recent past  are given  in our reply
to Q.90.
State Trading
Q.139 The Report (Chapter III, paras 63-64) notes that India continues to control imports and
exports by, inter alia,  the use of state trading monopolies.
(i) Could India please further elaborate on the role of these monopolies?
(ii) What mechanisms exist to ensure that these bodies import or export solely according to
commercial considerations?
Article XVII of GATT allows members to establish or maintain State Trading Enterprises (STEs) and
grant special privilege to such enterprises in matters of imports or exports.  STEs can be maintained
for either exports or imports.
In accordance with Article XVII of GATT, such State Trading Enterprises must:- function on commercial principles and
- be notified to the WTO (which allows trading partners to exercise surveillance over such
STEs, to ensure that the STEs thus notified function in accordance with commercial
considerations).
Accordingly, the above requirement has been sp ecifically incorporated for implementation as
para. 2.11 of the EXIM Policy (2002-2007).  As per the said para  any goods, the import and export of
which is governed through exclusive or special privileges granted to State Trading Enterprise(s), maybe imported or exported by the State Trading Enterprise(s) as mentioned in the ITC(HS) Book.  This
paragraph of EXIM Policy specifically prescribes that in respect of goods the import or export of
which is governed through exclusive or special privileges granted to STEs, the STEs shall make any
purchases or sales involving imports or exports solely in accordance with commercial considerations,
including price, quality, availability, marketability, transportation and other conditions of purchaseor sale.  These enterprises shall act in a non discriminatory manner and shall afford the enterprises of
other countries adequate opportunity, in accordance with customary business practices, to compete
for participation in such purchases or sales.  The role of STEs is given in India's notification
G/STQ/N/7/IND dated 8 October 2001.WT/TPR/M/100/Add.1
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KOREA
Anti-dumping and Safeguard Measures
Report by the Government of India:  para. 13 (page 8)
Report by the WTO Secretariat:  para. 42 (page 41)
Q.140 The Indian Government states in its Report that India has progressively liberalized its import
market by removing quantitative restrictions.  However, India has initiated many anti-dumping and
safeguards measures instead.  In comparison to other countries, India has initiated the largest numberof anti dumping measures during the period of July to December 2001, with a total of 51 cases;  when
those of the US, Argentina and EU were 35, 16 and 15 cases respectively.  We ask the Indian
Government to be more prudent in taking anti dumping and safeguard measures.
Please see answer to Q.101.
Q.141 The Ministry of Commerce and Industry of India determined in June of 2001 that compound
rubber products (SBR 1500, 1700 Series) from Korea were not causing injury to the Indian domestic
industry in that sector.  However, the Ministry of  Finance of India has not withdrawn its anti-dumping
duty yet.  Please present us with a definite time period for the withdrawal of this tariff.
Anti dumping duties on 1500 & 1700 series of SBR have been withdrawn since 31 May 2002.
The Tariff System of India
Report by the WTO Secretariat:  para. 11 (pages 27-28), paras 31-32 (page 37)
Q.142 The report by the WTO Secretariat states that  India still maintains relatively high MFN tariff
rates.  In addition, India often applies an 'Additional Duty' of 16% or a 'Special Additional Duty' of
4% on imported goods.  We ask the Indian Government to consider lowering the level of its tariff
rates and phasing out the imposition of the additional duties mentioned above.  Please elaborate on the
Indian Government's views regarding this matter.
The Additional Duty and the Special Additional Duty  are levied in lieu of domestic taxes namely,
excise duty and sales tax which are imposed on all domestic products.  Thus, these duties only attempt
to bring on the same level of tax incidences on imported products as faced by domestic products in
India.  Therefore, phasing out these duties is not required or feasible.
Customs Procedures and Postal Services
Report by the Government of India:  para. 13, 17 (page 8)
Report by the WTO Secretariat:  para. 5 (page 26), para 9 (page 27), paras 33-36 (pages 37-39)
Q.143 The report by the Indian Government states that to speed up customs clearance procedures,
the Electronic Data Interchange (EDI) system has been installed in most major ports and air cargo
complexes.  However, our understanding is that exporters abroad are still required to produce
complex documentations and are experiencing excessive delays in customs procedures.  We urge theIndian Government to further reform the customs procedures that work as non-tariff barriers.WT/TPR/M/100/Add.1
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For clearance of imported goods, normally, three documents namely invoice, packing list and Bill of
Lading/Airway Bill are required to be furnished by  the importers.  All other certificates/documents
such as health certificate, plant certificates, phytosanitary certificates, country of origin certificate etc
are required for import/export of certain categories of goods.  Certain additional documents are
required if import/export is being made under one of the export incentive schemes.
To reduce the paper work for clearance of imported/export goods, the Government has introduced
EDI at almost all the major ports and Air cargo complexes.  A number of measures to simplify theCustoms procedures have already been taken.
Q.144 It is also our understanding that the public postal service institution in India does not operate
express mail services .  Therefore, many trading companies use private express mail services, such as
DHL, when the need arises.  This means increased cost s in trading with India.  Please tell us if and
when traders in India will be able to utilize express mail services via the public postal service system.
India Post operates International Express Mail Service under its brand ‘Speed Post’.  The service is
highly economical and efficient.  International Speed Post service is available for 97 countries across
the globe from not only 120 National Speed Post Centres but also from 717 State Speed Centres
located in India.  Besides International Speed Post service for individual customers, for bulk EMS
consignments, India Post offers following value-added services:
- Single window booking.
- Duty draw back documentation Service.
- Special customs facilitation at foreign Post Offices.
- Tracking of consignments through internet.
Preference Policies for Public Sector Enterprises
Report by the Government of India:  pages 13-14
Q.145 With regard to infrastructure reforms in th e Indian Government Report, it states that India
grants a Purchase Price Preference (PPP) of 10% to public sector enterprises in its bidding process
when selecting a plant project builder.  This policy was initially adopted in January 1992 with a
limited term of three years, but the policy has been prolonged four times and will be subject to
termination at the end of April 2004.  We believe that this policy is very harmful to fair competition.
Please explain to us the Indian Government's views on this matter.
Purchase Price Preference to public sector enterprises has been important in building up the
enterprises, some of which have substantial social commitments.  Extension of the preference is to
help these enterprises transition to the liberalized and competitive environment.
Double Guarantee System and Branch Office in Construction Services
Report by the Government of India:  pages 19-20
Q.146 Regarding the GATS-related issues in the Indian report, India requires foreign construction
companies receiving plant orders in India to submit a 'Counter Banks Guarantee' to a local bank and
then receive a 'Bank Guarantee' by the local bank in order to pursue the construction orders.  Please
confirm whether this double guarantee requirement is also applied to local companies.  If thisWT/TPR/M/100/Add.1
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requirement is applied only to foreign companies, it appears to be a violation of the national treatment
principle of the WTO.  Please let us know the Indian Government's views on this matter.
Regarding India requiring foreign construction compan ies receiving plant orders in India to submit a
counter bank guarantee to a local bank and then a local bank issuing a guarantee to pursue
construction orders, it is advised that under Foreign Exchange Management Act, in terms of
Regulation 4 (2) of Notification No. FEMA 8/2000 - RB dated May 3, 2000, an authorized dealer in
India has general permission to give guarantee in respect of any debt, obligation or any other liabilityof a person resident outside India, subject, inter alia, to the condition that the guarantee given is
covered by a counter guarantee of a bank of International repute resident abroad.
This provision of FEMA is not applicable to  resident companies and hence, guarantees provided by
local companies are not required to be counter guaranteed by a bank abroad.  Thus in accordance
with India’s commitment, there is national treatment for both Indian and foreign companies
incorporated in India.
Q.147 Foreign construction companies operating two or more projects in India are having
difficulties in managing their funds because foreign construction companies are only allowed to
establish a liaison office and an individual project office but not a branch office.  Please clarify
whether the Indian Government has plans to permit the establishment of branch offices by foreignconstruction companies.
In terms of policy framed in consultation with th e Government of India, India’s commitments under
GATT for corporate presence are by way of equity participation up to 51%.  It is felt that corporate
presence by way of equity participation has distinct advantage over branch presence.  Therefore,
branch offices are restricted only for trading activities.  For manufacturing and construction
activities, corporate presence is preferred.  However, for executing specific projects, a project office
is considered sufficient.  Further, Liaison Offices are allowed to monitor such projects.
Telecommunications
Report by the WTO Secretariat:  footnote 173 of para. 98 (page 26)
Q.148 With regard to footnote 173 of para. 98, India categorizes radio paging as value-added
telecom services.  This is a different classification from most other members who categorize it as
basic telecom services.  Please provide us with the reasons or background for such a classification.  Inaddition, as far as Korea understands, India did not include radio paging in either the commitments for
value-added telecom services or in the commitments for basic telecom services.  What is India's plan
on the liberalization of the radio paging services market?
Radio Paging services in India have been defined as Value Added services.  Each country is free to
define what are value added services.  Radio Paging service is already liberalized.  The existingoperators are private operators and FDI is allowed in the sector.
Q.149 In dealing with applications for a new license on domestic long distance services, is it
regarded as a legitimate government action by the Indi an regulatory authority to restrict or change the
service areas proposed by the applicant on the grounds of government policy objectives or economic
needs?
The service area for Domestic Long Distance Services is the whole of India.WT/TPR/M/100/Add.1
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MFN Tariff Rates on Fish and Fishery Products
Report by the WTO Secretariat:  Table III.2 (page 32)
Q.150 According to table III.2 of the Secretariat Report, the MFN tariff rates on fish and fishery
products were increased to 35.0% in 2001/02 from 20.3% in 1997/98.  Please explain to us why this
increase in tariff rate took place.
The process of rationalization of rates and the tariff structure is an ongoing process.  The goal of this
process is to establish a two tier tariff structure by the year 2004-05.  Changes at any point in timeduring this process does not detract from the overall policy mentioned above.
BANGLADESH
Q151 Despite global economic slowdown, the Indi an Economy has remained one of the fast
growing major economies, and is increasing its participation in world trade .  The spirit of WTO
agreements is to encourage the growth of world trade and reduce barriers that stand in the way .  The
report by the Secretariat stipulates that the Government of India is concerned with inequities and
imbalances in some of the WTO agreements like anti-dumping .  Despite this the Government of India
has resorted to antidumping measures .  In fact the Secretariat report indicates that it has initiated some
250 cases since 1995 .  Could the Government of India inform us how many antidumping actions have
been initiated against developing countries? Of th e measures against developing countries how many
are still in place? Of the Antidumping cases initiated how many are against LDCs, and in which
periods?
Details of anti-dumping cases initiated by India have been regularly notified to the WTO.  The last
semi-annual report of anti-dumping cases for the period 1 July to 31 December 2001 is contained in
document No.G/A DP/N/85/IND of 5 April 2002.
Q.152 In general, India has protected its textile and clothing industry through tariff and quantitative
restrictions .  The average tariff protection is 31% .  In addition, imports are subjected to additional
duties .  What measures are being taken to liberalize its imports of textiles and clothing?
The quantitative restrictions on imports have been removed.  A number of additional textile items
have been bound after the last TPR in 1998 and some of these bindings are around 20%.  The average
applied tariff is also now lower as the peak tariff has been brought down to 30%.
Additional duties on imports, however, are in li eu of excise duty imposed on domestic products.
These do not, therefore, give any additional protection for local products.
Q.153 Despite India's commitment to RTA, the main regional destinations for India’s exports are the
European Union and East Asia .  The concessions granted by India under SAPTA (concessions on
2,565 tariff lines with special concessions to LDCs) have not been able to substantially increase
imports from neighbouring countries like Bangladesh despite its exports having increased to theneighbouring countries? Does the Government of India have any plan to extend duty free concessions
on products of export interest to neighbouring countries like Bangladesh? Does the Government of
India have any plan to strengthen RTAs under SAARC, BIMST-EC?
India has taken a number of steps towards free trade with its neighbouring countries.  It has bilateral
trade agreements with Nepal and Bhutan, which seek to give substantial market access to theproducts originating from these countries.  A Free Trade Agreement signed between India and SriWT/TPR/M/100/Add.1
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Lanka entered into force on 15 December 2001 under which duty concession are being exchanged on
a bilateral basis.  SAPTA is the framework availa ble for exchange of tariff concessions with other
neighbouring countries in the South Asian region, and as a major partner in the SAPTA India has
extended the maximum tariff preferences i.e. on 2,565 tariff lines, with tariff reductions ranging from
the 10 to 50 percent for non LDCs and up to 100% in some cases for LDCs.  India lifted all
Quantitative Restrictions maintained for balance of  payment reasons for SAPTA member countries on
1 August, 1998.  Fourth Round Negotiations on further deepening of tariff concessions under theSAPTA framework have already been launched in March 2002 and will be concluded in the second
and final session of this Round, which was earlier scheduled for May 2002, but has been postponed.
The Prime Minister of India has already indicated in the 10 SAARC Summit held in Colombo in
July 1998 that India would be willing to consider entering into bilateral Free Trade Agreement with
SAARC countries which are interested in moving faster towards trade liberalization.
It is true that India has a positive trade balance with some of its neighbouring countries.  Around 90%
of its exports to these countries, especially Bangladesh, however, are not based on any tariff
concession by the importing countries, but on normal MFN rates of duty applicable to any other
country.  India serves as a convenient and relatively inexpensive source of imports to these countries.
While India’s exports to these countries have increased, its imports from these countries also haveincreased over the years.
India is fully committed to freeing trade in South Asia under SAARC.  India also supports having a
PTA leading to FTA in the BIMST-EC region.  However, Government of India cannot take a
unilateral approach on these arrangements and decisions to strengthen RTAs under SAARC and
BIMST-EC have to be taken jointly by all participating member States concerned.
Q.154 In addition to standard tariff, most imports into India face additional and special additional
rates of duty .  The Secretariat Report in its section (vii) of chapter III stated that it is not clear whether
the additional duty actually imposed on each imported item corresponds to the excise tax levied on
that item .  Moreover, from the report it appears that there is lack of uniformity with regard to
imposition of Additional and Special Additional rates of duty between countries.  It has also been
observed that the State Governments impose special duties;  for instance a luxury tax is being
imposed by State Governments on imports .  If sales tax is levied at point of sale, how does the
Government ensure that imported goods are not subject to double jeopardy, i.e. taxes on imported
products are imposed both at import stage and at poin t of sale? Could the Government of India clarify
as to whether the State Government can impose taxes on imported goods and that such action does not
violate Article 3 (National treatment clause) of GATT?
India adheres to all its commitments under international treaties.  In India the taxation rights of the
Central Government and the State Governments are provided by the Constitution and as such are
clearly defined and separate.  In case there are any instances of double taxation or any taxation not in
conformity with any international obligation of India the same is taken up through various
mechanisms for suitable remedy.
Q.155 Tariffs in India are still relatively high .  The average applied MFN rate is around 32% .  There
is escalation in sectors like paper and printing, textiles and clothing, food, beverages and tobacco .
The average bound rate is 50% higher than the applied MFN rate .  Given this scenario, when does the
Government plan to streamline its tariff structure?
Please refer to reply to Q.72.WT/TPR/M/100/Add.1
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BRAZIL
Trade Policy Regime:  Framework and Objectives
Q.156 In the Report by the Secretariat, page 21, it is stated that SAPTA member countries are not
affected by Indian balance of payment import restrictions .  How is this exemption compatible with
GATT 1994?
India does not maintain any restrictions on BOP grounds either for SAPTA members or for other
WTO Members now.
Trade Policies and Practices by Measure
Measures Directly Affecting Imports
Q.l57 Is there any sort of governmental support to the production and export of Indian sugar?
Should the answer be in the affirm ative, how does this system work? Is there any timetable for the
reduction and the elimination of this program?
Support is provided by the government for R&D towa rds varietal improvement in sugarcane.  It is
covered under domestic support notifications.  On export of sugar no subsidy is provided.
Q.158 In the Report by the Secretariat, page 27, it is stated that the import tax revenue represents
30% of India’s tax revenue .  Is this dependence on the import tax revenue the reason why the Indian
average import tariff is so high (around 32.3%)?
The dependence on Customs revenue has been progressively coming down as is reflected in the
Report itself.  The Government has announced the ro ad map to move towards a two level import duty
structure by 2004-05.  The Government is also emphasising on revenue collections from direct taxes
and service taxes.
Q.159 The Reports show that, besides the fact that only 72.4% of tariff lines had been bound by
2001, the average of bound tariffs is very high (115.7% for agricultural products and 37.7% for non-
agricultural products) .  Under these circumstances, what are India’s intentions and expectations for
the new round of tariff negotiations on non-agricultural products launched in Doha?
The new round of tariff negotiation on non-agricultural products will take place in accordance with
the Doha Declaration.  India’s future tariff stru cture will have to reflect its domestic imperatives
including its developmental, fiscal and other requir ements.  Full consideration of these imperatives
would be expected during the negotiations.
Q.160 The Report by the Secretariat identifies tariff peaks and tariff escalation in the Indian tariff
system .  How does India think these themes should be dealt with in this round of negotiations?
India would be seeking to address the issues of tariff peaks and tariff escalation in the market access
negotiation as provided for in the Doha Ministerial Declaration as per the mandate.  The DMD, it
may be noted seeks the reduction or elimination of tariff peaks and tariff escalation, in particular on
products of export interest to developing countries.
Q.161 Besides high tariffs, does India also impose additional duties on imported products and does it
also forbid or restrict imports? If this is the case, how are such measures compatible with GATT 1994,WT/TPR/M/100/Add.1
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i.e., do those additional duties respect the ceiling consolidated tax rate? In the case of imports
forbidden, are those measures compatible with GATT 1994?
The additional duties are levied in lieu of dom estic taxes imposed on domestically manufactured
products.  They are imposed at the same rate on imported products as on like domestic products.
These are in accordance with Article III:2 of GATT 1994.  These are imposed in addition to the
customs duty.  The bound rate is applicable only to the rate of customs duty and not to the additional
duty.
Import restrictions are maintained by India on some products, these restrictions are compatible with
the provisions of GATT 1994.  India has removed all import restrictions maintained for BOP reasons.
Q.162 In the Report by the Secretariat, page 27, it is stated that when it is not possible to determine
the customs value of a product by the usually applied rules India uses a certain percentage of FOB
value .  What are the reasons for using the FOB value and what percentage is that?
Para. 2 to Article 8 of the Agreement on Implementation of Article VII of the GATT allows for the
contracting parties, to provide for the inclusion in or the exclusion of certain amounts from the
Customs value.  The value of the imported goods in India shall be the value of such goods for delivery
at the time and place of importation, i.e, the valuation will be based on CIF value instead of FOB
value.  Therefore, where the actual cost of transport is not ascertainable, such cost shall be 20% ofthe FOB value of goods, and where the actual cost of insurance is not ascertainable such cost shall be
1.125% of the FOB value of the goods.  This provision is, however, used rarely.  The loading,
unloading and handling charges associated with the delivery of the imported goods at the place of
importation shall be 1% of the FOB value.
Q.163 The Report by the Secretariat, pages 28 and 35, states that there are many exceptions to the
import tariff, which renders it more complex and less transparent .  The Indian Finance Ministry has
announced its intention to create two standard tariffs and to reduce those exceptions in order tominimize such consequences .  Is there already a program or a timetable for that?
India is following a programme of tariff simplification whereby by the year 2004-05, there would be
only two basic rates of customs duties.  The existi ng rates would be adjusted and subsumed in these
two basic rates.  Some exceptions on account of WTO bindings or higher tariffs for agricultural
products may be made.
Please also refer to answer to Q.72.
Q.164 How are the tariff quotas mentioned in page 35 administered and distributed? Please indicate
the relevant legislation.
The relevant legislation for administering TRQs is Foreign Trade (Development and Regulation) Act,
1992.  Applications for availment of  TRQ are invited by Directorate General of Foreign Trade  byway of a  Public Notice.  Public Notice lays down the procedure for making the application and also
includes the format of application.  Such applications are considered by an Inter ministerial Export
Import Facilitation Committee chaired by Director General of Foreign Trade.  The composition of the
Export Import Facilitation Committee is also clearly given in the Public Notice itself.
Q.165 In the Report by the Secretariat, page 39, it is stated that India monitors a list of 300 sensitive
products, such as fruits, coffee, cereals and vegetable oils.  What does that monitoring consist of? Are
there any measures restricting the import of such products?WT/TPR/M/100/Add.1
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India monitors the import of 300 items which are mainly agricultural items.  This import is monitored
to see whether there is any surge in the import of these items.
Agriculture
Q.166 It is stated many times in the Report by the Secretariat, in its section on agriculture, that India
is currently undergoing a process of structural economic reforms, and that a high level of
protectionism still persists .  It is stated that instruments such as price support measures, tariff
escalation, tariff peaks and quantitative import and export restrictions are frequently used .  How can
one characterize, in general terms, the state of the reforms being implemented by the Indian
Government? Specifically, what are the perspectives for further liberalization in the area of
agricultural products, such as sugar, soybeans, meat and tobacco?
India’s integration of agriculture with the global markets will be consistent with our developmental
needs and food security.  However, tariff rates applied are much lower than the bound rates in respectof a large number of agricultural commodities.  QRs have been removed for all agricultural items.
Export restrictions have been removed on all agricultural products except onion.  Sugar decontrol
has been accelerated in the recent years and there are no restrictions in meat and tobacco for trade.
Q.167 As for tariff escalation, India's import tariffs for some products can be of over 300% .  Does
the current reform program that Indian agriculture is undergoing foresee any means of eliminating or
attenuating this problem?
The applied tariffs for agricultural products vary from 5% to 100% adv. and they are well below the
WTO bound rates.  The only exception is in the case of alcoholic liquors where the applied  rate is
182% adv.  which is also the binding for this product for the current year.
Q.168 It is stated in the Report by the Secretar iat that state-owned trading enterprises play an
important role in the import, export and distribution of agricultural products in India .  In some cases,
this results in trade distortions .  What are the goals sought by the Indian Government in restructuring
these state trading enterprises?
No trade distortions ensue as a result of maintaining  State Trading Enterprises.  Article XVII of
GATT allows members to establish or maintain  State Trading Enterprises (STEs) and grant special
privilege to such enterprises in matters of imports or exports.  STEs can be maintained for either
exports or imports.
In accordance with Article XVII of GATT, such State Trading Enterprises must:
- function on commercial principles and
- be notified to the WTO (which allows trading partners to exercise surveillance over such
STEs, to ensure that the STEs thus notified function in accordance with commercial
considerations).
As per para 2.11 of the EXIM Policy, 2002-2007, any goods, the import and export of which is
governed through exclusive or special privileges granted to State Trading Enterprise(s), may be
imported or exported by the State Trading Enterprise(s) as mentioned in the ITC(HS) Book.  This
para specifically provides that in respect of goods the import or export of which is governed through
exclusive or special privileges granted to STEs, the STEs shall make any purchases or sales involvingimports or exports solely in accordance with commercial considerations, including price, quality,WT/TPR/M/100/Add.1
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availability, marketability, transportation and other conditions of purchase or sale.  These enterprises
shall act in a non discriminatory manner and shall afford the enterprises of other countries adequateopportunity, in accordance with customary business practices, to compete for participation in such
purchases or sales.
Q.169 In analyzing Graph IV.1 in the Report by the Secretariat, one can notice that the import tariffs
for some products (animal products, coffee, sugar, fruits, grains and tobacco) have been raised in the
period from 1997/1998 to 2001/2002 .  It must be conceded that the new tariffs, except those for
grains, are much lower than those consolidated for 2004 .  But does the Indian government have any
intention of reducing them in the current WTO negotiations?
India would not like to commit at this stage re garding the ongoing negotiations at the WTO on AoA.
Government Procurement
Q.170 With reference to para. 57 of the Report by the Secretariat, what are the criteria used to
exempt the Directorate General of Supplies and Disposals (DGS&D) from undertaking recurrent
public tenders? Should the need of recurrent purchase of goods and services arise, how is the supply,
payment and distribution of such goods and services carried out? Is this system which exempts the
DSG&D from public tenders applied to all modalities of government purchasing (public tender,
calling of bids, single tendering)?
Please refer to reply to question no. 107.
Q.171 With reference to para. 59 of the Report by the Secretariat, is there any exception for
purchases of a value over Rs. 200,000.00, which allows procurement to be carried out through limited
and single tenders? What are those exceptions?
No, there are no specific exceptions.
Q.172 With reference to para. 60 of the Report by the Secretariat, what arrangements for after-sales
services should non-Indian suppliers make in order to register with the DGS&D?
The requirement for after sales service for non-Indian suppliers is to ensure that any machinery
procured can be maintained.  Any reasonable system of after sales service would be acceptable.
Q.173 Is there any article in the Indian law on gove rnment procurement that deals with  the transfer
of technology in government procurement? What is the existing provision? Which law establishes
that?
Government procurement is not governed by any parti cular law in India.  All Indian laws, applicable
to commercial purchases apply.
Q.174 What kind of guarantees do Indian governmental entities request foreign companies to present
in government procurement procedures?
There is no difference in the procedure for registra tion of foreign companies as compared to those for
domestic companies.  However, for foreign companies, it is important that reasonable after sales
service is arranged for.  In this regard, any contract between a foreign supplier and its local agent is
called for to ensure that post procurement requirements would be adequately addressed.WT/TPR/M/100/Add.1
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Contingency Measures
Q.175 In the Report by the Secretariat, para. 41, it is stated that "a Committee was established in
August 2001 (…) to examine, inter alia, the adequacy of laws and procedures governing anti-dumping
investigations and consistency between the rules and statutes of the Directorate and the rules of the
Central Excise and Gold (Control) Appellate Tribunal".  Could India provide additional information
on the work conducted by this Committee? Considering that the Appellate Tribunal "is independent
from the Directorate General of Anti-Dumping and Allied Duties", how can its decisions be evaluatedby the head of that Directorate General?
The committee is examining various issues within the broad terms of reference.  The committee is yet
to come out with final report.  The decisions of CEGAT would not be evaluated by the DGAD.  If the
Designated Authority or the interested parties are not satisfied with the order of the CEGAT, the same
can be appealed in the Supreme Court, either by the Designated Authority or any of the interestedparties, as the case may be.  There have been cases where the interested parties have also gone to the
High Courts in writ jurisdiction.
Q.176 How many anti-dumping measures have been adopted by the Directorate General of Anti-
Dumping and Allied Duties based on best information available?
Anti Dumping investigations are country and exporter specific.  In a particular case there could be
more than one country and further in respect of each country more than one exporter may respond.
In a case there could be both cooperating and non-cooperating exporters.  There would also be
situation where names of exporters may not be known.  Thus in a case there would be various
permutations and combinations of co-operative and non-cooperative exporters.  Thus, such analysis
of percentage of cases where best available info rmation has been resorted to is not appropriate.
However, the definitive findings / semi annual reports available with WTO Secretariat may be
perused for such micro details.  On a broad basis in about 50% of the cases, best availableinformation had to be resorted to on account of no response at all from exporters.  Incidence of
rejection of exporter’s response and thereby resorti ng to best available information is however quite
low.
Q.177 It is stated in the questionnaire for exporters, published by the Directorate General of Anti-
Dumping and Allied Duties, that "[a]n interested party supplying information must ensure that all theinformation supplied is clearly marked either 'Confidential' or 'Non-Confidential' at the top of each
page .  Information supplied without any mark shall be treated as non-confidential and the Designated
shall be at liberty to allow the other interest ed parties to inspect any such non-confidential
information .  Confidential information must be accompanied by non-confidential summary, if it is not
conducive to summarization .  However, if the designated authority is satisfied that the request for
confidentiality is not warranted, the said information may be regarded as non-confidential." Based on
this instruction, is it correct to infer that the investigating authority may allow the other interested
parties to have access to information submitted as confidential by one interested party? Could India
explain that procedure? Is it compatible with article 6.5 of the Anti-Dumping Agreement, which
establishes that "such information shall not be disclosed without specific permission of the partysubmitting it"?
The procedure regarding confidential information has been more explicitly spelt out in the standard
forwarding letter being sent along-with every Initiation Notification.  The relevant extracts are as
under:WT/TPR/M/100/Add.1
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“Confidential Information:  An interested party supplying information must ensure that all the
information supplied is clearly marked either “confid ential” or “non-confidential” at the top of each
page.  Information supplied without any mark shall be  treated as non-confidential and the Designated
Authority shall be at liberty to allow the other interested parties to inspect any such non-confidential
information.  Confidential information must be acco mpanied by a non-confidential summary or, if it is
not susceptible to summarization, a statement of the reasons why summarization is not possible.
However, if the Designated Authority is satisfied that the request for confidentiality is not warranted,
or the supplier of the information is either unwilli ng to make the information public or to authorize its
disclosure in a generalized or summary form, the Designated Authority may disregard such
information.  A copy of all non-confidential submissions shall be placed in a public file, open for
inspection by an interested party participating in the investigation, on request.”
Therefore information claimed as confidential but not so treated by the Authority can at best be
disregarded by the Authority if the party furnishing such information is not willing to give non-
confidential summary of such confidential informat ion.  The confidential information so furnished is
not being treated as non-confidential and is also not being shared with any other interested party.
Q.178 In the Report by the Secretariat, it is stated that "[f]inal findings must be notified to the
Central Government within a period of one year from initiation of the investigation, although thisperiod may be extended by the Central Government for a period of six months (Section 17 (1) (a)) .
Definite anti-dumping  duties not exceeding the margin of dumping would be imposed within three
months of the publication of the final findings (…)." Does this mean the investigation may be
concluded, and anti-dumping duties adopted, 18 months after its beginning? Should a final finding be
notified within the period of one year after the beginning of the investigation, does India believe that
it is necessary to demonstrate that special circumstances prevail? Are these terms consistent with
article 5.10 of the Anti-Dumping Agreement and article 11.11 of the Agreement on Subsidies andCountervailing Measures, which establishes that "investigations shall, except in special
circumstances, be concluded within one year, and in no case more than 18 months, after their
initiation"?
As per article 5.10 of the Anti-Dumping Agreemen t and article 11.11 of the Agreement on Subsidies
and Countervailing Measures, "investigations shall,  except in special circumstances, be concluded
within one year, and in no case more than 18 months, after their initiation."
As per the legislation and practice in India the investigations are to be conducted and completed by
the Designated Authority within a period of one year from the date of initiation of investigation and
this period may be extended for a period of 6 mont hs by the Central Government.  However, after
issue of final findings the Central Government may impose definitive duty within 3 months from thedate of publication of final findings.  Central Government does not conduct any investigation and this
period of 3 months is not to be coun ted as a part of investigation period.
Q.179 India has frequently taken resort to anti-dumping measures .  Since 1995, it has started 250
such actions, and those measures effectively adopted have increased from 19 to 131, in the period of
1997 to 2000, as stated in the Report by the Secretariat, page 41 .  Does this mean the Indian market is
particularly prone to dumping practices by foreign exporters? Should the answer be in the affirmative,
what are the reasons for that? Has any of the anti-dumping measures adopted been halted after a
revision?
Please reply to question no. 73.WT/TPR/M/100/Add.1
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Q.180 According to para. 45 of the Report by the Secretariat, India has adopted safeguards against
eight products .  Is it the intention of the Indian government to extend the measures adopted in 1998?
Presently safeguard measures on imports of three products viz. phenol, acetone and gamma ferric
oxide are in force in India.  The safeguard measures adopted in 1998 have lapsed.
Trade Policies by Sector
Services
Software
Q.181 India has partially made specific commitments on market access and national treatment for
computer and related services .  In India's view, does the W/120 and CPC classification scheme cover
all kinds of software (i.e., customized and packaged)? If not, what does it cover?
Software implementation services  relating to Customized and Packaged Software are covered under
W/120 read with CPC 842.
Electronic Commerce
Q.182 The classification of "digital products" as goods or services and, consequently, the definition
of what rules apply to the international trade in those contents (GATT or GATS), has been the main
focus of the debate on the cross-cutting issues of the WTO Work Programme on Electronic
Commerce .  What is India’s position on this issue?
The issue of classification of ‘digital products’ as goods or services is a complex one, and the WTO
membership including India is still deliberating it.
COLOMBIA
Q.183 Regarding the taxes levied on imports, our government has interest in the implementation by
India of a single central excise duty rate of 16% and of an additional duty at the same rate for some
products.  The report mentions the existence of other taxes, such as the Special Additional Duty
(SAD) of 4%.  The government of Colombia woul d greatly appreciate further information about how
and when the India’s authorities will simplify the ad ditional and special additional duties to eliminate
the complexity of the excise tax structure.
Please see reply to Question 94 and Question 161.
Q.184 The Secretariat's report indicates that there have been difficulties in the administration of
tariffs, given the number of "exemptions" which are targeted at particular industries or end users.  Hasthe Indian government devised any plans towards clarifying the administration of these exemptions in
the tariff regime?
Please see reply to question no. 92.
Q.185 Whereas Colombia’s private sector is interested to export audiovisual services to new
markets, we would like to know with which countri es India has signed Co-production Agreements.  Is
India interested in signing new agreements of this  type? If it is so, which are the requirements to
subscribe these agreements?WT/TPR/M/100/Add.1
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India has taken MFN exemption under Audio-visual services sector for co-production agreements,
which is applicable to all countries.  So far India has co-production agreement only with Francewhich was signed in 1985.  India would be interested  in signing agreements of this type.  The broad
requirements for these agreements are as follows:
(a) Since the entertainment industry in India is largely in private hands, the Government would
act as a facilitator without interfering in the actual implementation of the agreement, which
will be between the private producer in India and the co-production partner in the othercountry.
(b) The country interested in entering into co-production agreement with India may start the
process by providing to Ministry of Information Broadcasting the status paper on the
entertainment industry in that country.  Thereafter, draft agreements may be exchanged and
discussed.
URUGUAY
Report by the Secretariat (WT/TPR/S/100)
II. SUMMARY OBSERVATIONS, TRADE AND TRADE-RELATED REFORMS,
PARA. 10
Q.186 Para. 10 states that "as a result of additional bindings taken by India in the WTO, the share of
tariff lines that are bound has increased since the previous Review, from 67% to 72%;  new bindings
were made primarily in textiles and clothing;  India also renegotiated bindings in some agricultural
items".
(i) Uruguay has special export interest in products such as leather, wool tops and wines, among
others.  Regarding wool tops:  1) Uruguay w ould like to know if India could provide some
information about he possibility to reduce the current bound and applied tariff for this product.
The details are given below:1. Hides (4101; 4102; 4103) - Applied Free Bound 25%
2. Wool tops (510521 & 29) - Applied 20% Bound 40%
3. Wines (2204) Applied 100% Bound 182% (Final bound 150%)
As for reduction  in respect of bound tariffs, this is an issue for the ongoing negotiations.
(ii) Uruguay would very much appreciate if India could also provide information about the
application of the additional duty (Ads) of 16% and the special additional duty (SAD) of 4% imposed
on imports of this product?
Please refer to reply to Q.94, Q.142 and Q.161.WT/TPR/M/100/Add.1
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UNITED STATES – Part I
Customs Procedures
Rules of Origin
Q.187 Please confirm our understanding that imported merchandise must be labeled with the country
of origin.  We also note that India has notified to  the WTO that it does not have non-preferential rules
of origin.
(i) If India does not have non-preferential rules of origin, how does India determine the validity
of labels indicating a particular origin of imported  manufactured products?
(ii) How does India ensure that the implementation of its origin labeling regime without rules of
origin does not discriminate between WTO Members, since there is no way for traders to
what would be the basis for the origin determinations under India’s labeling requirement
applicable to imported goods (e.g., whether a particular origin label was mis-leading orfraudulent)?
(iii) What is the method by which India meets its obligations under the WTO Agreement on Rules
of Origin for issuing assessments of origin under its labeling regime, within 150 days of
requests by exporters and importers, as provided under Article 2(d) of the Agreement on
Rules of Origin.
(iv) What is the method by which India meets its  obligations under the WTO Agreement on Rules
of Origin for providing traders the ability to appeal determinations made by the government
of India under the origin labeling regime applicable to imported goods?
As of now, India does not have non-preferential ru les of origin.  India is however looking forward to
an early finalization of the Non-Preferential Rules of Origin which is currently being negotiated in the
CRO of WTO.
In case of certain products, such as food and textiles, the name and address of the manufacturer are
required to be stipulated on the label of the imported product.  Mis-declaration and/or fraudulent
declarations are dealt with in accordance with normal customs enforcement practices across WTO
Members.
Notifications on India’s trade remedy measures make reference to goods "originating in, or exported
from" certain countries.  Exampl es of such articulation include notification 55-2002 (22 May 2002),
pertaining to "the matter of lead acid batteries falling under heading No.85.07 of the First Schedule
to the Customs tariff Act, 1976, originating i n, or exported from, Taiwan, Singapore and Hong Kong"
(underscore added).  Another example is notification 53-2002 (21 May 2002), pertaining to "the
matter of import of Vitamin AD3 500/100 falling under Chapter 23 or 29 of the First Schedule to the
Customs Tariff Act, 1975 (51 of 1975), originating in, or exported from, the European Union and
Singapore" (underscore added).
Q.188 Noting that India has notified to the WTO that it does not have non-preferential rules of
origin, how does India determine if a good is "originating" in a country of export?  If a good is
determined not to be originating in the country of export, how does it determine the country of origin
for such a good?WT/TPR/M/100/Add.1
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Q.189 What is the method by which a trader can obtain a determination of whether a product
imported into India is determined to be ‘originating in, or exported from” a particular country?
Whenever anti-dumping duties are imposed on the basis of the phrase ‘originating in or exporting
from’ a particular country, then anti-dumping dut ies are leviable on all goods exported from a
country irrespective of their origin except in case of mere transhipment.  The investigating
authorities, as a part of the investigation process, also request the exporters that in the event they are
not producing the goods themselves, they should pass on the exporters’ questionnaire to theproducers of the goods under investigation.
The dutiability of the goods subject to anti-dumpi ng duties is determined on the basis of evidence
prescribed before the authorities at the time of clearance of goods.  Generally, the ‘Certificate of
Origin’ by the authorities of the exporting countries is considered to be a valid and satisfactory
documentary evidence.
For Q.188 and Q.189:  India does not presently have non-preferential rules of origin.  Presently
importers declare the country of origin and the country of export on the goods declaration as well as
produce a country of origin certificate from the authorised agencies in the country of export/origin.
Normally such declarations and certificates are accep ted.  In case of doubt, references are made for
verification to the authorities issuing such certificates.  However, such cases of referral are very few.
Customs Valuation
Q.190 On 7 September 2001, India announced a change in its methodology for conducting customs
valuation, allowing customs officers the discretion to arbitrarily reject a transaction value on imported
goods if the price is judged to be too low.  As stated –  according to press reports –  by the
Confederation of Indian Industries, these amendments appear to "contravene the basic concept of
valuation under GATT."  Specifically, the amendments appear to place additional conditions on
acceptability of a declared transaction value, including the condition that “the sale does not involveany abnormal discount or reduction from the ordinary competitive price.”
(i) How does India justify the introduction of a customs valuation methodology for determining
'transaction value' that is inconsistent with Article 1 of the WTO Agreement on Customs
Valuation?
No doubt, the ‘transaction value’ will be the primar y method of valuation in India.  However, for
tackling the problem of under valuation, the decision taken by Ministers at the Marrakesh meeting in
April 1994 to deal with the issue of under val uation (‘Decision regarding cases where Customs
administration have reasons to doubt the truth or accu racy of the declared value’ taken by the WTO
Committee on Customs Valuation at its first meeting held on 12 May 1995 pursuant to the Marrakesh
decision) provides for rejection of transaction value in doubtful cases.
The amendments made in the rules bring out in much  clearer terms, the situations in which a custom
officer can reject a declared transaction value.  There is no unfettered discretion available to the
custom officers to reject a transaction value.  Th erefore, the amended provisions are in conformity
with the provisions of Article VII of the GA TT and Agreement on Implementation of Article VII of
GATT 1994.
(ii) What is the specific criteria under which a customs officer in India will determine whether a
declared transaction value is a ‘reduction from the ordinary competitive price’?WT/TPR/M/100/Add.1
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(iii) Is the 'ordinary competitive price' a referen ce to the India market, or the competitive market
of the exporting country?
(iv) If the 'competitive price' refers to the Indian  market, how is such a calculation relevant to
making a determination of the transaction value – which is defined in the Agreement on
Customs Valuation as "price actually paid or payable when sold for export to the country of
importation"?
(v) If the 'competitive price' refers to sales in the exporting country, how do Indian customs
officials make such a determination?
For (ii), (iii), (iv)& (v):  The ‘ordinary competitive price’ refers to the international or export price in
the country of export at or about the same time as the goods being valued, taking due account of
demonstrated differences in commercial levels, quan tity levels and other elements set out in the
Agreement on Implementation of Arti cle VII of the GATT 1994.  Published price lists of international
repute, made available to the Directorate of Custom s Valuation, are also used for this purpose.  The
selling price in the country of importation, that is in the Indian market, of goods produced in such
country is not used to determine customs value.
(vi) Please confirm that India continues the use of minimum import prices for customs valuation
purposes on certain steel products, and please identify those products to which such a regimeis applicable.  Please identify any other products that such a regime is applicable to.
India does not use minimum import prices for customs valuation purposes on steel products.  This is
without prejudice to our well known position on th e right of use of minimum value by India for
customs valuation purposes.
Market Access
Q.191 Para 16 - S/100 notes that India has committed to eliminate duties on 163 tariff lines at the 6-
digit level by the end of 2004.  Will those duties be phased down over the next two and one half yearsor will India eliminate all of the affected duties at the end of 2004?
The 163 tariff lines mentioned in para. 16 refer to India’s commitments  under the Information
Technology Agreement.  These are being phased out as per the schedule agreed to by ITA
Participants.
Q.192 Para 21 - S/100 notes that India’s Finance Mi nister stated that by 2004/2005 India would have
two standard rates of tariff, 10% and 20%.  What does “standard rates” mean in this context?
The relevant extract of the Finance Minister ’s statement from the budget speech for 2002-03 is
reproduced below :
"The House may recall that, in my last budget, I had announced that I would move progressively to
reduce the peak rate of customs duty to 20% within three years.  I had also said that the modalities for
this would be worked out in time for the next budge t.  I had accordingly set up an Inter-Ministerial
Working Group to recommend the modalities.  The Group has suggested a road map for this starting
with this year’s budget.  After careful consideration of the Group’s report, I have decided that, by the
year 2004-2005, there would be only two basic rates of customs duties, namely 10% covering
generally raw materials, intermediates and components and 20% covering generally final products.The existing rates would be adjusted and subsumed in these two basic rates with some exceptions onWT/TPR/M/100/Add.1
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account of WTO bindings or higher tariffs for agricultural products.  In accordance with the road
map I propose to reduce the peak rate from 35% to 30% this year."
Q.193 Will all duties be at one or the other of these rates or will these merely be the most common
rates in the schedule, with numerous items assessed duties higher than 20%?
Please see reply  to question no. 192.
Q.194 III.(iv) Tariff Exemptions, Para 25 - We note that 415 entries for tariff exemptions are
proposed for 2002/03.  S/100 states that these exemptions are made for various reasons but that theiruse increases the complexity of the tariff, reduces transparency and contributes to inefficiency of the
customs service.
(i) Is the proposed move to two "standard" rates of duty designed to significantly reduce the
complexity of the tariff exemptions as well as the tariff itself?
Please see reply to192.
 (ii) Please indicate the textile and apparel tariff lines that are exempted.
The Schedules incorporating the MOUs signed with the US and the EU may kindly be referred to.
The exemption on Textiles and Clothing items is available at http://www.cbec.gov.in/cae/customs/cs-
act/notifications/notfns-2k2/cs21-2k2.htm
 (iii) What are the criteria for granting exemptions?
 The criteria used to set tariffs take into ac count a number of parameters including inter alia,
bindings, the need for a phased duty reduction as part of the process of fiscal reform, the level of
protection needed by domestic industry from tim e to time etc.  While an annual comprehensive review
is undertaken at the time of the presentation of the Union Budget, reviews are also undertaken  at
other times depending on the national and international scenario with respect to a particular
commodity / sector.
 (iv) How do importers locate notifications pertaining to published tariff exemptions?
Generally speaking, barring exemptions notifications relating to commitments under international
agreements (bilateral, regional and multilateral) or  export promotion schemes, all other exemptions
have been consolidated into a single notification.  The entries in this notification have been arranged
serially, in ascending order of Chapter and within a Chapter, in ascending order of heading /sub-
heading.  The concessional rate of duty and the conditions, if any, governing the exemption areindicated in the notification itself.  This ensures simplicity and transparency.  All notifications are
available at  http://www.cbec.gov.in/cae/customs/cs-notfns-main.htm
 Q.195 Will India simplify its tariff system, making it more transparent and lowering tariff bindings
to eliminate uncertainty for importers and foreign exporters?
Please see answers to Q.5, Q.72 & Q.192.
 Q.196 Tariff quotas (para 28) - India’s administrative procedures for tariff rate quotas (TRQs) in
agriculture are not clear.  Could India please provide an explanation of the administration of its TRQ
regime for agriculture? For example, how are shares allocated for specific agricultural TRQs?  AreWT/TPR/M/100/Add.1
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there differences in allocation procedures depending on the product?  What are the fill rates of these
TRQs?
 India is administering Tariff Rate Quota for Ski mmed and Whole milk powder, Milk food for babies,
maize(corn), Rape, colza or mustard oil, other (refined), sunflower seed or safflower oil or fractions
thereof (crude).  Applications for allocation of TRQ are invited by DGFT by way of public notice.
This public notice also clearly prescribes the procedure for making the application.  Application pro-
forma, date of making the application, authority to whom  the  application is to be made etc. are  also
given clearly in this public notice.  Applications so received are considered by Export Import
Facilitation Committee, which is an Inter-Ministerial committee chaired by DGFT.  The composition
of this Committee is also given in this public notice.  The procedures adopted for receiving and
consideration of application of TRQ are the same for all products.
 Section vii, Additional and Special Additional Duties, Paras 31 and 32
 Q.197 We understand India has a complex system of central excise duties.
(i) The current system, which includes multiple schedules of additional duties, is very confusing
making it difficult to project which taxes will be levied.  If it is also difficult to ascertain
whether the identical duty is also applied to domestic goods on the same basis.  Please
explain.
Additional duties are levied on imported goods at the same rates as applicable to  domestic goods.  It
is incorrect to state that there are multiple schedules.  There is only one schedule  for CENVAT, one
for the special duty of excise and one schedule for the special additional duty , which is in lieu of a
number of local levies.  Additional duties of exci se on goods of special im portance and textile and
textile articles are levied  on some items only and th e respective schedules with respect to these items
need to be referred to only in those cases.
(ii) American textiles industry has found that additional and special additional duties increase the
cost of imports between 35 and 55 percent .  Do domestic goods also incur a commensurable
cost?
Additional and special additional duties, are meant to neutralize similar duties levied on domestic
goods.
Please see answer to Q.94 also.
 Q.198 III.(vii) Additional and Special Additional Duties, Para 32 - S/100 states that a special
additional duty of 4% is assessed on most imports to tax imports "similarly" to state sales taxes.  Are
imported goods otherwise not subject to state sales taxes?  How are state sales taxes assessed that
results in the exemption of imported goods from such taxes?  Usually sales taxes are assessed on the
final sale of a good to its consumer or user.  Is this  not the case with Indian state sales taxes?  By what
process do the states collect sales taxes on domestic goods and allow imported goods to avoid the
sales tax?
 Under the Constitution of India, State Government s cannot impose sales tax on imports. Under the
Central Sales Tax Act, 1956, imports and exports have been defined in such a manner that a privity of
contract needs to be established between the seller and buyer. This means that if it can be proved thata sale has been executed for the purpose of import or export or a sale has been executed in the course
of imports and exports, then sales tax cannot be levied by State Governments. The Supreme Court ofWT/TPR/M/100/Add.1
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India has prescribed stringent guidelines on this issue. Under the existing laws, sales tax can be
assessed on first point of sale or on the last point of sale. Taxes on domestic goods are levied andcollected by the State Government through prescribed authorities and different goods are taxed at
prescribed rates under the Uniform Floor Rates regime, which has been agreed to by all the State
Governments. Please also refer to answer to Q.94.
(i) Since India is moving toward a single central excise duty of 16 percent, does this mean it will
be eliminating other additional duties, such as the Goods of Special Importance Tax, Cesstaxes and Textile and Textiles Articles taxes?
No. The movement towards a single uniform rate of  16% applies only to the duties leviable under the
First (Basic excise duty) and Second Schedule (Special excise duty) to the Central Excise Tariff Act.
The additional duties are levied under various other enactments and   the rationale underlying each
of these levies is different.  The former is levied in lieu of sales tax on fabrics.  There is no sales tax ongoods covered by the Additional Duties of Excise (Goods of Special Importance) Act.  Concomitantly
there is also no special additional duty on these goods when imported.  Cesses are levied on goods
like crude oil, coal etc in order to generate funds for the development of this sector.  Since all these
duties are not excise duties, they do not come under the purview of the single rate of excise duty.
Please also see reply to Question 94.
 Q.199 (III) Trade Policies Regime :  Framework and Objectives (3) Foreign Investment Regime
(para. 34)
(i) As stated in this section, various tax and non-tax incentives are available to foreign investors.
Please explain what type of  tax and non-tax incentives are provided, what is the eligibility
criteria, and are these incentives limited to specific sectors (if so, which ones)?
(ii) Are the investment incentives available equally in all regions or areas of India? Or are some
investment incentives available only to specific regions?  If so, what are these regions?
(iii) Also, the report notes that the incentives "appear" to be offered to domestic and foreign
investor.  Could India please clarify if the same or similar incentives are being offered to both
domestic and foreign investors?
General/sector or region specific tax and non-tax incentives apply to both domestic and foreign
investors without any discrimination provided the foreign investment is in the form of an incorporatedentity in India.  In other words, all companies incorp orated in India are entitled to avail themselves of
such incentives subject to fulfilment of the eligibility criteria as laid down under the relevant scheme.
There are various types of tax and non-tax incentives, some of which are sector specific such as tax
holiday for infrastructure projects, tax holiday under software technology parks scheme and some
others are region/ zone specific such as tax concession for investment in backward areas, tax andother incentives for SEZ units, transport subsidy scheme for hilly regions, etc. the eligibility criteria
and nature of incentives are specified in the relevant schemes.
Q.200 (III) Trade Policies and Practices by Measure (2) Measures Directly Affecting Imports (viii)
Import Prohibitions, Restrictions, and Licensing (para. 36)WT/TPR/M/100/Add.1
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(i) India's import restrictions on imported used automobiles have caused “more stringent (i.e.
prohibitive) standards that are applied to imported used cars...than to domestic used cars ofthe same age.”  What measures are being taken to rectify this situation?
 DGFT has prescribed certain regulations on the im port of new and second hand or used vehicles on
31.03.2001, in order to ensure consumer protection, road safety and pollution control.  These
conditions have been imposed for complying with th e provisions of the Central Motor Vehicles Act,
1988 and the Rules made there under, which are equally applicable on domestically producedvehicles.  The condition of used/second hand vehicles more than 3 years old not being allowed for
import has been imposed because of non-availability of spare parts and lack of service chain for these
old vehicles, which would jeopardize consumer protection and  road safety.
 (ix) Minimum import prices
 Q.201 Para 38 :  When will India dismantle its minimum import price regime for certain steel
products?
By Ministry of Commerce (DGFT) Notification No. 34 (RE-98) dated 10.12.1998, minimum c.i.f.
value/ floor prices were fixed on import of seconds and defectives of certain iron/steel  items.  Vide
Notification No. 35 (RE-98) dated 11.12.1998, similarly,  floor prices were fixed on import of prime
items.  However, Government of India decided to remove minimum floor price restriction on import ofprime steel items and accordingly, vide Notifica tion No. 31 dated 1.11.99, price restrictions on prime
items were withdrawn with effect from 1.1.2000.
But this withdrawal notification has been challe nged before Hon’ble High Court of Kolkata and the
matter is sub judice.
Section xii, Standards, Testing and Certification, c) Labelling and Marking, Para. 55
 Q.202 We understand India recently notified requirements for all packaged products subject to the
provisions of the Standards Weights and Measures Rules, 1977, when produced, packed or sold inIndia.
(i) Why does India require the maximum retail sales price on packaged goods?
Import of all packaged commodities has been made s ubject to compliance of all the conditions of the
Standards of Weights and Measures (Packaged Commodity) Order, 1977, as applicable on the
domestic producers.  In India, the domestic industry is subject to the provisions of Standards ofWeights and Measures Act, 1976 regarding packaging of the product.   As per Section 39 of the
Standards of Weights and Measures Act, 1976, domestic manufacturers, packers, sellers, distributors
etc. have to adhere to the requirement of declaring the unit sale price of a commodity in a package
and the sale price of a package which shall also bear thereon the name of the manufacturer and also
of the packer or distributor.  Accordingly, the said requirement under question being applicable ondomestic packaged goods has been extended as pe r national treatment to imported goods as well.
MRP is crucial information from the point of view of consumer interest.
(ii) The U.S. textile industry has raised concerns regarding the marking and labeling requirements
for textile and apparel products imported into India.  The USG has been unable to obtain an
official copy of India's textile and apparel labeling and  marking requirements.  Could youprovide a copy of the requirements currently applied to imported, as well as to domesticWT/TPR/M/100/Add.1
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textile and apparel products?  Also, are these labeling and marking requirements available to
the public?
(iii) There has been no WTO notification of these measures.  Would India please clarify the new
labeling procedures and the scope and purpose of their application?
Certain textile products irrespective of whethe r these have been manufactured indigenously or
imported are required to contain all the statutory markings as envisaged vide Clause 3 (e) of the
Textiles (Consumer Protection) Regulations, 1988.  The main objective behind prescribing themarking regulations is to ensure that the consumer has the information regarding specifications of
cloth/material, which he is intending to purchase.  The Regulations do not discriminate against
imported products vis-a-vis indigenous products.
These Regulations are notified in the official Gazette of India and are freely available to the public.  A
copy of the Textiles (Consumer Protection) Regulations, 1988, is being provided to the US delegation.It is also available on the website of the office of the Textile Commissioner, Government of India at
http://ermiul1.bom.nic.in
 Subsidies
 Q.203 With respect to the programs/incentives identified below, we remind India that under Article
25 of the Agreement on Subsidies and Countervailing Measures, all Members to the WTO haveagreed to notify all subsidy programs
 meeting the definition of a subsidy, as provided in the
Agreement, to the WTO Committee on Subsidies and Countervailing Measures.  The notificationshould be specific enough to enable other Members to evaluate the trade effects and to understand the
subsidy program.  Members shall ensure that the notification contain the following information:
(i) form of the subsidy (grant, loan, tax)
(ii) subsidy per unit or total amount or annual budgeted for that year
(iii) purpose of the subsidy
(iv) duration of the subsidy
(v) statistical data providing  assessment of the trade effects of the subsidy.
 (i) Please indicate whether these, or any of India’s other subsidy programs have been
duly notified.
 (ii) If not, please indicate whether India plan s on notifying these and any other subsidy
programs to the Committee.
 India has vide Notification No. G/ SCM/N/71/IND notified certain benefits availed of by its exporters
under Sections 10A, 10B and 80 HHC of the Income Tax Act 1961.
 (III) Trade Policies and Practices by Measure (2) Measures Directly Affecting Imports
(xi) Contingency Measures (para. 45)
Q.204 When does India plan to notify the impositi on of safeguard duties for methylene chloride to
the WTO?WT/TPR/M/100/Add.1
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India has already notified to the WTO the final fi ndings of DG(Safeguards) in respect of safeguard
action on imports of Methylene Chloride.  The Government has not yet taken a decision forimplementing the recommendations of  DG(Safeguards) in this case.  If a decision is taken to impose a
safeguard measure this would be notified to the WTO immediately.
 (III) Trade Policies and Practices by Measure (2) Measures Directly Affecting Imports
(xvi) State-Trading  (para. 63)
Q.205 It is noted that India does not maintain any direct subsidies.  However, the State-trading
companies offer domestic subsidization for fertilizers and petroleum products.  Can you please clarify
what type of subsidization is being provided?
Q.206 What measures are being taken to notify these subsidies under state-trading companies?
Answers to Q.205 & 206:  The role of State Trading  Enterprises in respect of fertilizers has been
given in document No.G/STQ /N/7/IND dated 8 October 2001.
 (III) Trade Policies and Practices by Measure (3) Measures Directly Affecting Exports
(iv) Minimum Export Prices (para. 72)
Q.207 Under India's Export-Import policy, are the mini mum export prices equal to or lower than the
domestic prices for similar or "like" products?
Under Export and Import Policy the Minimum Export Price (MEP) requirement is not applicable on
any export product.  In the ITC(HS) Classification of Export and Import Items 2002-2007 , announced
on 31.03.2002 ,  in the Export Policy no MEP requirement is applicable on export of any product.
India was maintaining MEP on export of stone boulders and coir products,  however, the same have
been discontinued.  The export of onion is permit ted through State Trading Enterprise.  ITC(HS)
Classification of Export and Import Items 2002-2007  does not prescribe any MEP on export of onion
also.  However, STEs  prescribe MEP on export of onion.
Q.208 Are onions the only product subject to minimum export prices?The export of onion is permitted through State Tradi ng Enterprise.  ITC(HS) Classifications of Export
and Import Items 2002-2007 does not prescribe any M EP on export of onion also.  However, STEs
prescribe MEP on export of onion.
 (III) Trade Policies and Practices by Measure (3) Measures Directly Affecting Exports
(viii) Duty and Tax Concessions (General)
Q.209 Please explain whether the duty drawback pr ogram is operated in accordance with Annex II
of the SCM Agreement.
In India’s view the duty drawback programme is operated in accordance with Annex II of the
Subsidies Agreement  as there is a system in pla ce to confirm which inputs are consumed in the
production of the exported product and in what amounts.  Furthermore the actual incidence of dutyare verified on the basis of relevant records of the manufacturers and the duty documents.WT/TPR/M/100/Add.1
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 (III) Trade Policies and Practices by Measure (3) Measures Directly Affecting Exports
(viii) Duty and Tax Concessions (para. 81)
Q.210 Under India's duty drawback scheme, the re fund rates vary depending on whether the goods
are being exported "without being used" or "exporte d after use".  Please explain how, in India’s view,
this is consistent with Annex II of the  SCM Agreement?
Q.211 Could India please explain what qualifies as a good being exported “without being used”
versus goods being exported “after use”.
Answers to Q.210 and 211:  Under Section 74 of the Customs Act, when any goods capable of being
easily identifiable which has been imported into India and upon which any duty has been paid on
importation are exported out of India, the Central Go vernment by virtue of Notification 19-CUS dated
6.2.1965, as amended up to date pays drawback at the specified rate.  These are the rates at which
drawback of import duty is allowed in respect of  goods used after their importation.  In addition,
Section 74 of the Customs Act 1962, also permits dr awback of 98% of customs duty in respect of any
imported goods which are entered for export by post under Section 65 of the Customs Act and the
proper officer makes an order permitting clearance of the goods for exportation.
 (III) Trade Policies and Practices by Measure (3) Measures Directly Affecting Exports
(viii) Duty and Tax Concessions (Table III.7)
Q.212 Please provide an explanation of the eligibil ity criteria and who receives the benefits  under
the Brand Rate Fixation.
Q.213 Could India please explain what the differen ces are between the Duty Drawback Scheme and
the Brand Rate Fixation Scheme?
Answers for Q.212 and 213:
Fixation of All Industry Rate of Drawback
The drawback division annually fixes and notifies the all industry rates of duty drawback within
90 days of the announcement of the Union Budget for providing input stage duty relief of the duties of
Customs and Central Excise in respect of more than 800 export products.  These rates are formulated
after taking into account inputs used in the export product, quantity of inputs consumed in export
product and incidence of duty on these inputs, verified on the basis of relevant records of the
manufacturer users and the duty documents.
Fixation of Brand Rate s of Duty Drawback
Brand Rates are fixed for those products for which no rate has been fixed or All industry rate
provided is considered inadequate by the exporter as they have incurred higher duty incidence on the
inputs used in the manufacture of export products.
Brand Rate of duty drawback is determined on the actual input utilization basis depending on the data
furnished by an exporter manufacturer, which is subject to verification.  These rates are determined
on a case to case basis and can be considered to be exporter specific.  Since the duty drawback is
based on the actual utilization data provided by the exporter and as this data is subject to verification
the scheme is in accordance with the requirement.WT/TPR/M/100/Add.1
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 (III) Trade Policies and Practices by Measure (3) Measures Directly Affecting Exports
(x) Free-Trade Zones (Para. 87-91)
Q.214 Can you please provide further details with regards to specific tax exemptions or incentives
that companies receive if they locate in the free zones (EPZ’s), export oriented units (EOU’s), or
special economic zones (SEZ’s)?
Export Processing Zones and Export Oriented Units are entitled for tax exemption up to 90% on
export earnings for a block of 10 years on sliding scale up to 2010 under Section 10-A and 10-B ofthe Income Tax Act.  SEZ units are entitled for 100% tax exemption on export earnings for five years
and 50% tax exemption for subsequent two years under Section 10-A of the Income Tax Act.
 Vide Finance Act, 2002-2003, an amendment has been made in Central Sales Tax Act, 1958 by whichsales from Domestic Tariff Area (DTA) to EPZs/EOUs are exempt from sales tax.
Q.215 Are there any special employee benefits offered to companies which locate in the free zones
(EPZ’s), export oriented units (EOU’s) or special economic zones (SEZ’s) such as reduction or
financing of employee training etc?
Q.216 If there are benefits that are paid to the company for employment or employee purposes, are
those benefits the same for both small-and-medium size companies as well as larger companies?
Q.217 Are any of the incentives provided to comp anies located in EPZ or EOU’s contingent upon
the use of locally produced goods?
 Answers to Qs.215, 216 and 217:   No such benefits are being given.
Q.218 Are all enterprises from all sectors eligible to receive benefits under the EPZ’s, EOU’s and
SEZ’s?
Yes
Q.219 Other than the incentives listed in Table III.8, can India please state what the “more attractive
incentives than those accorded to the EPZ’s”?
Incentives listed in Table III.8 are comprehensive.
Q.220 Could India please provide further details on the process of an EPZ converting into a SEZ?
Existing Export Processing Zones are converted into Special Economic Zone in consultation with the
zone enterprises already located in the Zone.  On conversion, all the units are governed by the policy
applicable to units in Special Economic Zones.  The existing EPZ units not desiring to opt for SEZscheme can either convert into an Export Oriented Unit or debond.  In both the cases, the unit shall
physically move out of the SEZ.
 (III) Trade Policies and Practices by Measure (4) Measures Affecting Production and Trade
(i) Industrial policy (b) Small scale industries (SSI)
Q.221 Please provide information on when additional items will be de-reserved from the SSI list.
Are there plans to remove additional items beyond those identified in the 2002 Ministry of Finance
Budget?WT/TPR/M/100/Add.1
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Government of India has dereserved 51 items on 20/5/2002 and changed the nomenclature of 2 items.
The issue of reservation/de-reservation of items for exclusive manufacture in the small scale sector isa continuous process and is reviewed continuously by the Advisory Committee constituted under the
Industries Development and Regulation Act, 1951.  In addition, the Ministry of Small Scale Industries
also consults various stakeholders before taking any decision for dereservation of items.
Q.222 Please provide clarification  whether public sector purchasing preferences such as non-
mandatory government purchase (for 356 items) and price preferences (up to 15%) constitute importsubstitution subsidies as defined  under Article 3.1(b) of the Subsidies Agreement.
The purchasing preference is granted for governmental purchases and is a part of the government
procurement system.  Preferences to domestic supp lies and suppliers for governmental procurement is
out side the ambit of the WTO regime.  In India, as mentioned in the question, such preferences are
non-mandatory, i.e., it is up to the procuring entity to provide the preference or otherwise. 
 (III) Trade Policies and Practices by Measure (4) Measures Affecting Production and Trade
(ii) Tax measures and other incentives/subsidies (b) Other incentives/subsidies
(Paras 130 and 148)
 Q.223 Could India please provide information concerning the provision of subsidies (such as theRetention Price and Subsidy Scheme) with respect to the production, importation, sale and/ordistribution of Diammonium Phospha te (DAP) fertilizer?  Specifically, please provide information on
the following:
 (i) Background, authority, form of subsidies, and policy objective or purpose, including a copy
of the implementing legislation;
 (ii) Procedures for determining the subsidy pa yments for both domestically-produced DAP and
imported DAP and the actual subsidy payments made for both categories in each of the past
three years;
 (iii) An explanation of why the subsidy payments  differ between domestically-produced DAP and
imported DAP and why the size of the difference has increased over time.
 (iv) The subsidy payments per unit for both domestically-produced DAP and imported DAP or, if
this is not possible, the total annual amount budgeted for the subsidy for domestically-
produced DAP and imported DAP, and;
 Please refer to answer to Q.226
Q.224 Statistical data permitting an assessment of th e trade effects of the subsidy program, including
Indian import levels of DAP during each of the past three years.
Please refer to answer to Q.226.
 Q.225 In addition, please provide information concerning the recipient of benefits under this
program with respect to the production, importation, sale or distribution of DAP.
Please refer to answer to Q.226.
 Q.226 Finally, please confirm whether the Retention Price Subsidy scheme has been notified to the
Subsidies Committee in accordance with Article 25 of the Agreement on Subsidies andWT/TPR/M/100/Add.1
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Countervailing Measures.  If this assistance program has not yet been notified, please indicate when it
will be notified.
Answers for Q.223 to 226:
(a) There is no retention price cum subsidy scheme for DAP and complex fertilizers.  However,
there is an arrangement for sale of DAP and ot her complex fertilizers to the farmers on the
principle of affordable cost to them, as majority of the farmers are resource poor.  There is a
Scheme of Concession for DAP which primaril y takes into account the variable cost on
account of feed-stock etc.  There is also an arrangement to extend concession on imported
DAP which is basically to sell the fertilizers at the uniform price to farmers through the
country.
(b) The Maximum Retail price for DAP and complex fertilizers are generally announced by the
Ministry of Finance in the Annual Budget after consultation with the Department ofAgriculture &Cooperation, Agriculture Prices Commission and other farmer bodies.
(c) The Concession differs between indigenous D AP and imported DAP to ensure uniform price
to the farmers through out India on account of reasons given at (a) above.
(d) There is no unit-wise or importer-wise subsidy payment recognized under the Concession
Scheme.  During 1998-99 around US$ 773 milli on was benefited by the farmers under the
concession scheme through the marketing mechanism.
Over 90% of the land holding in the country are with the small, marginal and semi-medium formers
who do not have adequate resources.  The usage of N.P.K. fertilizer in soil is also not balanced.  In
order to make the DAP and complex fertilizers available at an affordable price for both indigenous
and imported fertilizers, the uniform pr ice is determined by the Government.
The recipient of benefit under this programme with respect to sale and distribution of DAP are the
farmers and most of them are resource poor.
 The scheme on concessions for DAP fertilizers has not been notified to the Subsidies Committee.  Full
information is being obtained from the re levant authorities within the Government.
 (III) Trade Policies and Practices by Measure (4) Measures Affecting Production and Trade
(iii) State-owned enterprises
 Q.227 Please provide a definition of “strategic invest or” as it relates to the Government of India’s
disinvestment strategy and list any restrictions re lated to who may participate in the privatization
process under these new requirements.
The term “Strategic Investor” refers to the investor who is the purchaser (also referred as Strategic
Partner) of the block of shares sold by government in the case of strategic sale of a Public Sector
Undertaking (PSU).  In the strategic sale of a PSU, the transaction has two elements:
- Transfer of a block of shares to a Strategic Partner and
- Transfer of management control to the Strategic partnerWT/TPR/M/100/Add.1
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There are no restrictions on who may participate in the disinvestment process except certain
eligibility criteria to ensure that only such invest ors come in who have the capability to take over the
management and enhance enterprise value post sale.
The eligibility criteria are in the form of minimum networth / turnover criteria that the bidder must
satisfy, for qualification.  Certain other criteria to ensure the clean track record of bidders is
enshrined in the guidelines for qualification of Strategic Investor Bidders seeking to acquire stakes in
Public Sector Enterprises through the process of disi nvestment.  There is absolute level playing field
vis-à-vis foreign and domestic bidders.
 Q.228 Please indicate whether the steel industry is considered a “strategic” public sector enterprise(related to defense, railways, or atomic energy).  Please provide details on whether a decision has
been made about whether to disinvest from the steel industry and any available information on a time
line for the privatization of any state owned steel companies.
Steel is considered to be one of the high priority sectors but the industry is not reserved for the public
sector.  Since the announcement of the new industrial policy in 1991 the iron & steel industry has not
only been removed from the list of industries reser ved for the public sector but also exempted from the
provisions of compulsory licensing under Industri es (Development & Regulation) Act, 1951.  Further
with effect from 24.5.92 iron and steel industry ha s been included in the list of "high priority"
industries for automatic approval for foreign equity investment up to 51% which has since been
subsequently raised to 74%.  Steel sector is not classified as "strategic" for purposes of disinvestment.
No final decision regarding disinvestment of steel units in the public sector has been taken so far and
no time frame has been decided upon in this regard.
 Section ii, Tax Measures and Other Incentives/Subsidies (a) Taxation and Tax Measures,para. 119, Central Taxes
 India has announced that it is gradually moving towards replacing excise duties with a full-fledged
value-added tax (VAT) on manufactured goods:
Q.229 When will anticipate the VAT will be fully implemented?  Aren't some states trying to delay
introduction of the VAT?
An Empowered Committee of State Finance Ministers has been constituted for deliberating upon all
aspects of domestic trade tax reforms including implementation of VAT.  The Committee has decided
that all States will replace the present Sales Tax regime with the VAT regime with effect from
1.4.2003.
Q.230 Do you anticipate that the items previously ex empt from the excise duties, now being charged
between 4%-8%, will be charged at the full 16% rate? If so, when?
Yes. The 4% duty will be increased to 16% in four equal annual instalments.Q.231 What 8 items are subject to a supplementary special duty rate of 16%?
These items are polyester filament yarn, motor cars, multi utility vehicles, tyres for replacement
purposes, aerated soft drinks and soft drink concentrates, air conditioners, pan masala and chewing
tobacco and miscellaneous tobacco preparations.
Q.232 How will you ensure that imports are not taxed twice?WT/TPR/M/100/Add.1
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Extant Laws are clear in this regard.
 Section ii, Tax Measures and Other Incentives/Subsidies (a) Taxation and Tax Measures, para.
120, Central Taxes
 Q.233 In an attempt to further broaden the indirect tax base, a tax on services was introduced.  Weunderstand that 41 services are subject to the tax.
Q.234 What 41 services are subject to the tax?
 Answers for Q.233 & 234:   The list of 41 services subject to tax are as below:
 SERVICE TAX
 S. No.  Taxable Services  Date of imposition  Remarks
1.  Telephone services  1.7.94  
2.  General Insurance Services  1.7.94  
3.  Stock broking services  1.7.94  
4.  Advertising Services  1.11.96  
5.  Courier services  1.11.96  
6.  Radio paging services  1.11.96  
7.  Customs House Agent Services  15.6.97  
8.  Steamer Agent Services  15.6.97  
9.  Air Travel Agent Services  1.7.97  
10.  Mandap Keeper Services  1.7.97  
11.  Clearing and Forwarding Agent Services  16.7.97  
12.  Rent A cap scheme Operator Services  16.7.97  
13.  Consulting Engineer Services  7.7.97  
14.  Man Power Recruitment Services  7.7.97  
15.  Tour Operator Services  1.9.97  
16.  Architect Services  16.10.98  
17.  Interior Decoration/Designer Services  16.10.98  
18.  Underwriter Services  16.10.98  
19.  Credit Rating Agency Services  16.10.98  
20.  Chartered Accountant Services  16.10.98  
21.  Cost Accountant Services  16.10.98  
22.  Company Secretary Services  16.10.98  
23.  Real Estate Agent/Consultant Services  16.10.98  
24.  Security/Detective Agency Services  16.10.98  
25.  Market Research Agency Services  16.10.98  
26.  Management consultant Services  16.10.98  
27.  Scientific and technical consultancy services  16.7.2001  
28.  Photography Service  16.7.2001  
29.  Convention Service  16.7.2001  
30.  Leased circuits  16.7.2001  
31.  Telegraph service  16.7.2001  
32.  Telex Service  16.7.2001  WT/TPR/M/100/Add.1
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 S. No.  Taxable Services  Date of imposition  Remarks
33.  Facsimile Service  16.7.2001  
34.  On-line information and database access and/or
retrieval services 16.7.2001  
35.  Video tape production services  16.7.2001  
36.  Sound recording services  16.7.2001  
37.  Broadcasting Service  16.7.2001  
38.  Insurance auxiliary services  16.7.2001  
39.  Specified Banking and other financial services  16.7.2001  
40.  Port services  16.7.2001  
41.  Authorized service station for servicing of motor car
and two wheeled motor vehicle 16.7.2001  
 Competition policy
 Para 147
 Q.235 What is the status of Competition Bill, 2000? When might passage be expected?
The Competition Bill is at present under consideration of the Parliament.Intellectual Property (paras 153-194)
Q.236 The report indicated that new amendments to the Patent Act of 1970 have been introduced in
Parliament.  Please indicate the status of the amendments in the legislative process and the likely date
of enactment.
The amendments to the Patents Act have been passed  by both Houses of Parliament and is expected to
be brought into force shortly after it receives the assent of the President and on finalization of the
Subordinate Legislation.  The work in this regard is going on.
Q.237 As you know we have concerns regarding the su bstantial backlog of patent applications in the
Indian Patent Office.  The report indicates that India is in the process of modernizing its patent office
and increasing the number of patent examiners.  Please provide detail on India’s efforts to improvethis situation.
Government has taken up modernization of Patent Offices.  The project has several components
including computerization of operations, re-engineering of work procedures, human resource
development, infrastructural development, and cl earance of backlog of pending applications.  Two
modernized offices in Delhi and Chennai were made operational in July and August, 2001respectively while work is going on in Mumbai and Kolkata.  Initial level computerization has already
been completed;  comprehensive computerization is being done by a specialized agency.  The issue of
clearance of backlog of pending patent applications is also being addressed through improved
productivity and induction of additional examiners.
Q.238 According to the report, the Central Governme nt may, in the public interest, decide that a
compulsory license should be granted at any time.  The Report also notes that compulsory licensing
may also be applied in respect of exclusive marketing rights.  Please describe in detail the situations in
which such use can occur.WT/TPR/M/100/Add.1
Page 82
As per the amendments to the Patents Act recently passed by both the Houses of Parliament, the
provisions relating to erstwhile Section 97 of the Patents Act have been modified.  According toSection 92 of the modified provision, if the Central Government is satisfied, in respect of any patent in
force, in circumstances of national emergency or in  circumstances of extreme urgency or in place of
public non-commercial use, that it is necessary that compulsory licences should be granted at any
time after the sealing thereof to work the invention, it may make a declaration to that effect, by
notification in the Official Gazette.  Thereupon, the Controller shall on application grant acompulsory license in accordance with the provis ions of Section 92.  An elaborate procedure has
been prescribed for this.  Provisions for grant  of compulsory license on patent with suitable
modifications, shall also be applicable on EMR
Q.239 You indicated that trademark regulations have not been put in place yet.  Please indicate the
time-frame for enactment.
 The Trade Marks Rules, 2002 have since been notified in the gazette of India and the Trade Marks
Act, 1999 is expected to be brought into force shortly.
 Q.240 The Reports notes the establishment of a Copyright Enforcement Ad visory Council (CEAC)
to address copyright piracy problems.  Please describe in detail the current and proposed actions taken
by the CEAC.  Has the CEAC drafted an action plan  to tackle the piracy issues?  Are counterfeiting
problems also addressed by this Council?
Following the suggestions of the CEAC, State Governments have designated nodal officers to
facilitate proper coordination between copyright industry organizations and the enforcement
agencies.  Copyright infringement is a criminal offence.  The prime responsibility to nab the culprits
rests with the Police.  Copyright enforcement cells or special cells in the Crime Branch have been set
up at Police Headquarters in the States/Union Territories to exclusively monitor copyright
infringement cases.  Government, in cooperation with copyright organizations and educationalinstitutions regularly organizes seminars and workshops in different parts of the country to sensitize
the people about copyright matters.
 Section xii, Standards, Testing and Certification, a) Standards, Para. 46.
 Q.241 We understand that India has notified the WTO th at the Bureau of Indian Standards (BIS), the
national standards body of India had been designated as the WTO-TBT Enquiry Point.
(i) We appreciate receiving India’s recent notification on labeling and we look forward to
providing comments, which we hope India will take into consideration.
(ii) Prior to 2002,  India only notified two proposed regulations since becoming a WTO member
– one in 1996 and the other in 1999 .  This lack of transparency makes doing business difficult
and discourages investment in India.
India has regularly been notifying various SPS and TBT measures to the respective Committees of the
WTO.  However, in some cases notifications have been issued by the Government of India whereby
technical standards or labeling requirements, already being enforced on domestic manufacturers over
a long time, have been extended to the imported products.  We have notified these standards to the
WTO.WT/TPR/M/100/Add.1
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 Section xii, Standards, Testing and Certification, a) Standards, Box III.2 Development of IndianStandards
 Q.242 We understand that Indian draft standards are issued and circulated for a period of at least
three months amongst the various interest groups concerned and that the technical committee may
also decide not to circulate the standard, if necessary, including when the standard is considered
urgent or non-controversial.
(i) Please describe the circumstances under which a standard is implemented in an “urgent”
situation.
Bureau of Indian Standards (BIS) which is the national standardizing body and also the enquiry point
under the WTO agreement on TBT provides a period of 90 days to enable the member countries to
send their comments on a draft technical regulation proposed to be finalized by BIS.  Various
standards are made mandatorily applicable on consum er items in the form of ‘technical regulation’
by the various departments and ministries of th e Govt. of India depending on the nature of the
proposed regulations.  The general practice is to publish the proposed regulation in a draft form in
the Gazette of India inviting objections and suggestions from all persons likely to be affected thereby
within a reasonable period of time.  In the light of comments and suggestions, the regulation is
finalized and applied.  Standards may also be enforced without circulating the proposed measure indraft form to members for comments on ‘urgency’ grounds in accordance with Art 2.10 of the
Agreement on TBT.
 Section xii, Standards, Testing and Certification, b) Certification, Para. 50
 Q.243 We understand Indian and foreign manufacturers  who meet a BIS standard my carry the BIS
Certification Mark.
(i) Please provide further details on how to get products certified by BIS?
(ii) Can third party conformity assessment bodies get accredited by BIS?(i) information on BIS certification procedure is available on BIS website (http://www.bis.org.in)
(ii) BIS does not act as an accreditor.  The Quality council of India is the national accreditor.
 Q.244 Paras 51-53- Sanitary and phytosanitary measures  - The Secretariat report does not
mention India’s Customs Circular No. 36/2001 dated June 15, 2001 which provides for procedures for
sampling and testing of agricultural products upon importation.  In accordance with this notification,imports have been subject to 100 percent sampling and testing procedures, which slows the process of
importation and which serves as a non-tariff barrier to imports.  The procedures are onerous, placing
undue burden on importers and it appears that the procedures are not based on scientific risk
assessments.  What is the justification for the 100 percent rate of sampling and testing?  When does
India plan to revise its testing and sampling procedures so as not to treat imported agriculturalproducts less favorably than those products produced domestically?
 Please see answer to Q.135.WT/TPR/M/100/Add.1
Page 84
 MALAYSIA
 Q.245 Para 2 of Che.1 of the Secretariat Report noted that the Government of India intends toincrease its share of world trade from the present 0.67%, requiring an annual growth of 12% .  In what
areas does India envisage the increases in trade will stem from?
India has formulated a Medium Term Export Stra tegy for 2002-07 which envisages a CAGR of 12%
in the next five years to achieve a share of 1% in World Trade.  220 focus items have been identified
in the sectors like Engineering/Electrical/Electronics, Textiles, Chemical and allied products,Leather, Agricultural and allied products etc.  Many macro policies and sector-specific policies are
being implemented as suggested in the Medium Term  Export Strategies.  These measures are expected
to help India in achieving the stated target.
 Q.246 India maintains a high tariff regime, although this has been gradually reduced.  Its statedobjective is to simplify and reduce the tariff regime to two tiers by 2004/2005, with tariffs on 10% forraw materials, intermediates and components and 20% for final products.  Does India intend to
implement this in a single stage or will it be implemented gradually?
This will be done in a phased manner by 2004-05.
 Q.247 India continues to maintain a high level of duties (above 50%) on a number of agricultural
products including edible oils, with bindings up to 300%.  In some instances, including for edible oils,MFN rates were higher than the final bound rate.  Would India be reviewing these rates in light of
their stated objectives in the 2002/2003 Budget speech?
It is incorrect to state that MFN rates on certain items including edible oils are higher than the final
bound rate.  Please also refer to answer to Q.128.
 NORWAY
VAT
 Q.248 The Government Report refers to plans of introducing a comprehensive VAT system in all the
States by 2003.  We would appreciate an update on progress in this work.
 Please see answer to Q.81.
 Maritime Transport
 Q.249 Could the Indian delegation please provide information about the regulatory regime formaritime transport.
Port Sector
(i) There are 12 Major Ports in India.  All Major Ports except the new Port at Ennore are
governed by the Major Port Trusts Act, 1963.  Ennore Port is the first corporatized Port of
India incorporated under the Companies Act, 1956.  All Major Ports are also governed by the
Indian Ports Act, 1908.  Apart from Major Ports, there are 181 Minor Ports under the controlof the concerned State Governments.   However, about 75% of the total traffic is handled by
Major Ports and 25% by the Minor Ports.WT/TPR/M/100/Add.1
Page 85
(ii) An Independent Tariff Authority for Major Ports (TAMP) was set up on 10th April, 1997 for
fixing and revising the Tariff of major ports.
(iii) The Major Ports at Kolkata, Visakhapatnam and Kandla have Dock Labour Board (DLBs)
set up under the Dock Workers (Regulation of  Employment) Act, 1948.  The function of DLBs
is to provide regular employment to dock labour.
Shipping Sector
Shipping in India is governed by the provisi ons of the Merchant Shipping Act, 1958.  The
implementation authority is the Directorate Genera l of Shipping, Mumbai which also regulates the
multi-modal transport governed by the Multi-Modal Transportation of Goods Act, 1993.
UNITED STATES - Part II
WT/TPR/G/100
IV. Trade Policies by SectorAgriculture
Removal of Quantitative Restrictions of Imports
Q.250 India’s restrictions on imports on the grounds “of security, health, safety, and moral conduct”
are explicitly laid out in this review.  However, the United States points out that India doesn’t include
their practice of 100% sampling of imported food products.  Why is this practice not mentioned?
The Prevention of Food Adulteration (PFA) Act, 1954 and Prevention of Food Adulteration Rules,
1955 are applicable on all foods for domestic sales.  These regulations have been made applicable on
import of edible/food products also.  With a view to  ensuring compliance with the relevant provisions,
procedural guidelines like sampling of imported products etc to be followed for the clearance of
consignment of food articles are prescribed by Cu stoms through circulars issu ed from time to time.
Various customs circular are posted on the webs ite of the Ministry of Finance and, thus, may be
readily accessed by the public.
WT/TPR/S/100
Agriculture and allied industries
IV. Trade Policies by Selected Sector
(2) Agriculture:  Overview
Q.251 It should be noted that since the last review, intentions to increase exports through state-
trading intensified.  Example of this is the GOI’s decision to tender wheat for exports through
government parastatals – such as the State Trad ing Corporation (STC) and Project and Equipment
Corporation (PEC) – in October 2000.
 Government of India have not directly sold any wheat for export purposes.  However, the FoodCorporation of India(FCI) had invited an expression of interest from all parties, with no a prioriexclusions, by issuing a global tender in view of its surplus stock position.  The wheat was taken from
FCI by cooperative agencies like NCCF, NAFED and MARKFED also, in addition to the StateWT/TPR/M/100/Add.1
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Trading Enterprises like STC, PEC etc.  In any case as per the EXIM Policy of the Government of
India at that time, export of wheat was free subject to certain quantitative limits wherein any privateindividual/firm could also export.  These quantitati ve restrictions have also been removed since then.
Q.252 IV.(2)(iii) - Export policy - India recently notified export subsidies in agriculture in
March 2002 (G/AG/N/IND/3).  India did not establish a base for export subsidies during the Uruguay
Round negotiations, and therefore has a zero ceiling for export subsidy outlays.  How does India
justify providing export subsidies included in its notification?  In addition, in October 2000, the GOIbegan tendering government-held stocks of wheat at 30 percent below the administered price support
for wheat and 50 percent below the government’s acquisition cost of wheat.  The preferential sales
price was contingent on exportation of the wheat.  In April 2001, the GOI began a similar program for
rice.  Why did India choose not to notify these programs in its March 2002 export subsidy notification
as well?  Also, when does India plan to eliminate the sale of government-held stocks contingent onexportation?
Towards the end of the fiscal year 2000-2001, India started meeting a portion of the costs of handling,
upgrading and other processing costs and costs of international transport and freight for export of
wheat from the stocks held by Food Corporation of India.  The wheat from the stocks of Food
Corporation of India are sold at Open Market Sale Price to anyone who wishes to purchase in Indiaor outside.  A similar procedure is also followed for export of rice released by Food Corporation of
India from 2001-2002.  India takes recourse to provisions of Article 9.1(d) and (e) of the Agreement
on Agriculture in making such transactions.  Supple mental notifications will be made to the WTO.
Q.253. IV.(2)(iv) - Internal policies - The Secretariat report recognizes that India administers a
minimum price support-government purchase program for selected agricultural commodities (e.g.,
rice and wheat).  India did not establish a base for domestic support during the Uruguay Round
negotiations, as India’s calculated aggregate measure of support (AMS) was below the 10 percent deminimis level.  Given that India has been increasing the minimum support price for commodities such
as rice and wheat, and that government stock levels have been increasing, is it possible that India has
or will exceed the de minimis level for these products?  Please explain.
For the year 1997-98 up to which India’s domestic support has been worked, India’s AMS is still
negative by a huge amount.  In the near future it is not likely that India’s AMS would exceed the de-minimis level of 10%.  To dispose of surplus stock the Government of India has been using a part of
these surplus stocks to create assets in rural areas through various employment generation
programmes and distribute foodgrains to the people Below the Poverty Line at concessional prices.
These steps are required to ensure that food and livelihood concerns of the vulnerable sections of the
population are adequately addressed.  The State Governments have been encouraged to procurefoodgrains from their States to enable proper utilization of the foodgrains so procured by the States in
their respective States.  Certain schemes are also being implemented to shift areas from cereals
cultivation to pulses and oilseeds cultivation.
Textiles
GOI report, report para. 44:
Q.254 India’s statement that the major trading partners of India have not made any industrial
adjustment nor have accorded any meaningful access to developing countries like India cannot be
reconciled with the data in table A.I.2, which can be  used to calculate the growth in India’s exports of
textiles and clothing from the 1997/1998 fiscal year to the 2000/2001 fiscal year.  This shows a
healthy increase of 25 percent.  Furthermore, the statement conflicts with U.S. import statistics showWT/TPR/M/100/Add.1
Page 87
that U.S. imports of textiles and apparel from India increased 85 percent in volume and 73 percent in
value since the ATC entered into force.  Since India’s argument is that ATC benefits have beendenied India, it would be helpful for India to prov ide export data for the period the ATC has been in
effect.
We would also like to note that in the U.S. market, the 90 percent global increase in imports under the
ATC has led to intense structural adjustment for the textile and apparel sectors throughout the
transition period, as anticipated by the agreement.  Since continuous autonomous industrialadjustment and increased competition are important objectives under the ATC, which are to be
promoted by all Members, we would appreciate information and available data on the extent to which
the textile and clothing sectors in Indi a are undergoing structural adjustment.
A statement indicating the total textile exports, and the US share during the pre and post ATC period
is indicated in the table below.  It may be seen therefrom that the exports of textiles and clothing havebeen increasing over the years.  However, the growth rate has slowed down considerably from
1996-97 onwards.  Interestingly the ATC was in force from 1995 and export growth has slumped
subsequently.  For example, the growth rate was to  the tune of 68.2% in $ terms between 1991-92 to
1995-96.  But after the ATC the same has been only 10.5% between 1996-97 to 1999-2000.  In the
case of US, while the growth from 1991-92 to 1995-96 was 87.4%, it was only 14.3% from 1996-97 to
1999-2000.  However if we also include the impendi ng scenario emerging in 2000-02, the growth rate
will be much less (exports are slowin g down in US by approximately 20%).
As regards the observations regarding 90% global increase in US imports under the ATC, it is stated
that in case of US, the growth rate on textil es and clothing imports during 1994-2001 is 8.38% as
compared to 9.1% during 1990-94.  The major gr owth has been captured by CBI+NAFTA.  The
growth rate in case of CBI+NAFTA has be en 25.10% during 1990-94 and 15.68% during 1994-2000.
In case of the restrained categories, the growth is only 8.69% during 1990-94 and 6.06% during1994-2000.
It would also be pertinent to mention that the textile tariffs in major importing countries are much
higher than the industrial tariffs.  For instance, the US tariffs on clothing products are almost 8 times
the overall average, which bring in nearly half of US’s $ 20 billion in annual tariff revenue.
Furthermore, tariffs within these categories are usually higher on cheap goods imported fromdeveloping countries e.g. the US import tariffs are 19.7% for cotton shirts and 32% for MMF shirts.
The Government of India has been taking continuous measures for effecting structural adjustments to
meet the challenges of Post Quota Regime.   Some of the recent measures are as follows:-
(i) The Government has de-reserved the woven segment of readymade garment from the SSI
sector.  It has also announced the de-reservation of knitted segment in the Budget 2002-03.
(ii) Certain measures have been taken to facilitate the modernization and upgradation of this
sector so that it can become more competitive in international trade.
(iii) With a view to encouraging backward integration, the custom duty on shuttleless looms has
been brought to 5%.  A programme has also been announced to induct 50,000 shuttleless
looms and to modernize 2.5 lakh powerlooms in the decentralized sector by 2004.
(iv) Foreign equity participation up to 100% through automatic route has been allowed in the
textile sector with certain exceptions.WT/TPR/M/100/Add.1
Page 88
(v) Reduction in the cost of machinery through fiscal policy measures announced in the budget
2002-03.
(vi) Technology Mission for Cotton has been launched for initiating focussed steps for boosting
production, productivity and quality of cotto n for manufacture and export of competitive
downstream textile products.
The National Textile Policy – 2000 (NTxP-2000) has been announced to provide the policy direction
for orderly and sustained development and growth of  the textile industry in a harmonious way and to
give a thrust to textile exports.
Figures for Total Textile Exports
Year Value in US$ Million CARG
Before ATC
Total
1991-92 5069.7 10.96
1992-93 5051.9 10.96
1993-94 5998.9 10.96
1994-95 7548.4 10.96
1995-96 8526.9 10.96
US
1991-92 804.4 13.39
1992-93 883.7 13.39
1993-94 938.2 13.39
1994-95 1,382.3 13.39
1995-96 1,507.4 13.39
After ATC
Total
1996-97 9,555.0 2.52
1997-98 9,797.5 2.52
1998-99 9,548.2 2.52
1999-00 10,556.7 2.52
US
1996-97 1,781.7 3.41
1997-98 1,802.6 3.41
1998-99 1,997.1 3.41
1999-00 2,037.3 3.41
Source: DGCI&S
Secretariat Report, para. 28.
Q.255 Since the websites contained in footnote 35 could not be retrieved, can India provide
information as to the tariff preferences provided for textiles and clothing for least developed countriesunder the SAARC and Bangkok Agreement.
The details of the tariff concessions on textiles and clothing provided under the SAPTA Framework to
LDC’s are provided under Customs Notification 105/99-Customs dated 10 August 1999.  The details
are available at http://www.cbec.gov.in/cae/customs/cs-act/notifications/cs105-99c.htmWT/TPR/M/100/Add.1
Page 89
The list of preferences provided by India to LDCs (Bangladesh is the only LDC Member country)
under Bangkok Agreement is given below.  Sr. Nos 28 to 33 pertains to  tariff preferences providedfor textiles and clothing.
India's concessions to LDCs (Bangladesh) under the Bangkok Agreement
Sl. NO. TARIFF DESCRIPTIONBASIC DUTY
2002-2003Rate offered
under the BA
1 0305.51 Cod (Gadus morhua, Gadus ogac, Gadus macrocephalus) 30% Nil
2 0305.59 Other 30% Nil
3 4104.22 Bovine leather, otherwise pre-tanned 25% 15%
4 4104.29 Other 25% 15%
5 4104.31 Full grains and full grain splits 25% 15%
6 4106.11
(4106.21
or
 4106.22
or
 4113.10)Vegetable pre-tanned 25% 15%
7 4106.19
(4106.99
 or
 4106.92)Other 25% 15%
8 4111.00
(4115.10)Composition leather with a basis of leather or leather
fibre, in slabs, sheets or strip, whether or not in rolls.25% 15%
9 4403.10 Treated with paint, stains, creosote or other preservatives 5% 15%
10 4403.20 Other, coniferous 5% 15%
11 4403.41 Dark Red Meranti, Light Red Meranti and Meranti
Bakau5% 15%
12 4403.49 Other 5% 15%
13 4403.91 Of oak (Quercus spp.) 5% 15%
14 4403.92 Of beech (Fagus spp.) 5% 15%
15 4403.99 Other 5% 15%
16 4703.11 Coniferous 5% 5%
17 4703.19 Non-coniferous 5% 5%
18 4703.21 Coniferous 5% 5%
19 4703.29 Non-coniferous 5% 5%
20 4704.11 Coniferous 5% 5%
21 4704.19 Non-coniferous 5% 5%
22 4704.21 Coniferous 5% 5%
23 4704.29 Non-coniferous 5% 5%
24 4801 00 Newsprint, in rolls or sheets (of a particular type used for
printing of newspapers)15% 5%
25 4802.51
(4802.54)Weighing less than 40 g/m² 30% 15%WT/TPR/M/100/Add.1
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Sl. NO. TARIFF DESCRIPTIONBASIC DUTY
2002-2003Rate offered
under the BA
26 4802.52
(4802.55
or
4802.56
or
4802.57)Weighing 40 g/m² or more but not more than 150 g/m² 30% 15%
27 4802.53
(4802.58)Weighing more than 150 g/m² 30% 15%
28 5007.20 Other fabrics, containing 85 % or more by weight of silk
or of silk waste other than noil silk(Jamdani Sarees)30% Nil
29 5007.90 Other fabrics (Jamdani sarees) 30% Nil
30 5208.49 Other fabrics (Jamdani sarees) 30% or Rs. 200
per kg, whichever
is higherNil
31 5209.49 Other fabrics(Jamdani Sarees) 30% or Rs. 150
per kg, whichever
is higherNil
32 5701.90 Of other textile materials 30% 25%
33 5703.90 Of other textile materials 30% 25%
In addition, concessions on the following items of textiles and clothing granted to other Member
countries are also available to LDCs:
Sl.NO. TARIFF DESCRIPTION BASIC DUTY
2002-2003Rate offered
under the BA
1. 5001.00 Silk-worm cocoons suitable for reeling. 30% 25%
2. 5105.10 Carded wool 20% 15%
3. 5105.21 Combed wool in fragments 20% 15%
4. 5105.31
or
5105.39Fine animal hair, carded or combed 20% 15%
5. 5105.40 Coarse animal hair, carded or combed 20% 15%
Para. 34:
Q.256 The Secretariat comments that “it appears” that the Special Import License program has been
discontinued.  Can India provide a definitive statement on the status of the Special Import License
program?  If the program has been eliminated, what is the effect on the issuance of import licenses?
It is confirmed that Special Import Licensing Scheme (SIL) has been discontinued with effect from
1.4.2001.  No special import licence has been issued after 1.4.2001.
Secretariat Report, para. IV.2.
Q.257 The Secretariat notes that the textile and apparel sector remains protected by relatively high
tariffs, but in para. 47 and elsewhere, acknowledges that 33 percent of tariff lines in the textile andclothing sector involve alternative specific duties.  The Secretariat states that it was unable toWT/TPR/M/100/Add.1
Page 91
calculate the effect of the alternative specific duties.  The Secretariat further notes that, insofar as
specific rates conceal relatively high ad valorem  equivalents, the average level of tariff protection
may be underestimated (as well as being less predictable), and this situation affects one-third of
India’s import regime in the textile and apparel sector.
(i) Can India provide a calculation of the ad valorem  equivalents of the tariff lines in the textile
and clothing sector that involve alternative specific duties, as well as the back up data used in
making the calculations?
(ii) More generally,  can India provide a current and definitive list of all tariffs, taxes and “other
charges” that are applied to imports of textile products into India, including at the sub-federal
level, if appropriate, as well as a citation to law or regulation that provide for the assessment
of such charges?
(iii) For each such special or additional tax, charge, fee or duty, can India provide a statement of
the corresponding charges on domestic goods, if any?
(iv) Can India describe the custom and administrative formalities associated with importations of
textile products into India?  Is there one central place, an office or website or document, that
provides information regarding  all of the fo rmalities associated with importing textiles into
India?
(v) Are there specific customs or administrative formalities associated with the importation of
textile products into India that are applied at the sub-federal level?
(vi) How are India’s trading partners notified of changes in Customs or other administrative
formalities associated with importing?
The tariffs in India have come down significantly  and the decline has been much faster than in many
other developing economies.  The specific duties provide the equivalent protection and were finalized
after detailed negotiations with major trading partners namely US and EU in July/September, 2000.
India has faithfully carried out its WTO obligations, and has initiated concrete steps to eliminate
quantitative restrictions and lowering of tariffs.  There has been a progressive reduction in the
applied Indian tariffs over the years.  The peak rates have been slashed from 75% in 1998 to an
average of 30% in 2002.  The present applied tariffs for certain textile products are even less than
20%.  The applied textile tariffs are less than the bound rates in nearly half of textile tariff lines;  andless than 59% of the bound rates.
Further the textile tariffs in India are not different from the tariffs in case of other commodities, which
is not the case of some other economies where average textile tariffs are much higher than other
commodities.
The procedure for Customs clearance of textile products is the same as that for other products.
However, textile items are required to be tested in certain situations to ensure compliance of
conditions imposed by the Ministry of Textiles or the Directorate General of Foreign Trade. One such
condition is testing of textile products to find out whether they have been manufactured using
hazardous dyes.   All the Customs provisions and formalities for clearance of goods are available in
the Central Board of Excise and Customs Website (www.cbec.gov.in).WT/TPR/M/100/Add.1
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There are no Customs or administrative formalities associated with importation of textile
products into India that are applied at the sub-federal level.
All the changes in Customs formalities are published in the Official Gazette and are also
made available in the  Website (www.cbec.gov.in).
Secretariat Report, para. ii. 40.
Q.258. Can India provide data and information on the “smaller markets” which are the focus of
India’s efforts to diversify its textile and clothing exports?
India’s textile products are being exported to mo re than 100 countries of the world.  Continuous
efforts are made to diversify the product portfolio and markets through participation in
Exhibitions/Fairs, holding of Buyer Seller Meets et c.  The promotional events are also organized by
the Association of Exporters in non-quota mark ets such as Japan, Australia, Middle East, Sub-
Saharan African Region and the Latin American Countries.
Q.259 Can India and/or the Secretariat provide comments on the extent to which internal factors,
such as those noted in footnote 77 and the second-to-last sentence of para. 43 have inhibited India’s
ability to restructure its textile and apparel industries?
While India is taking steps to address the internal factors as mentioned in reply to Q.254, it is also to
be emphasized that India’s textile export performan ce has been hampered by external factors such as
lack of meaningful integration by major restraining countries and the increasing concentration of
regional trade due to formation of FTAs and Customs  Unions.
Please also see answer to Q.254.
Para. 46
Q.260 Please identify the specific “further incentives” available for the textile industry (such as
granting exemptions from payment of excise duties for specified machinery to help in technological
upgrading, such as the Technology Upgradation Fund).
CENVAT exemption has been provided on specific textile machinery items (45 in numbers) pertaining
to weaving, processing and silk reeling industry.  Besides, capital goods required by jute industry for
making jute textiles have also been exempted from CENVAT.  CENVAT exemption on most of these
machinery items has been given mainly to provid e a level playing field to indigenous manufacturers
since import of such machinery item s is also exempt from additional duty.
Export measures (paras 51 and 53)
Q.261 Please confirm whether the export promotion capital goods scheme, advance licensing
scheme, duty exemption pass book scheme, export oriented unites/free trade zones scheme and the
duty drawback scheme have been notified to the Subsidies Committee in accordance with Article 25
of the Agreement on Subsidies and Countervailing Measures.  If these assistance programs have notyet been notified, could India please indicate when they will be notified.
In India’s view, these schemes do not constitute a subsidy in terms of the Agreement on Subsidies and
Countervailing Measures in light of Annex I to the SCM Agreement read with footnote 1 thereto.
Accordingly, these schemes have not been notified to the Subsidies Committee.WT/TPR/M/100/Add.1
Page 93
Q.262 Please confirm whether the External Market As sistance Scheme for jute product exports was
extended or replaced with a similar program to provide benefits to jute exporters beyond the reporteddeadline of 31 March 2002.  Please provide a complete description of the replacement program, if
applicable.
External Market Assistance Scheme for Jute Product has been amended.  Jute Yarn which formed
biggest component of the scheme has been taken out of the purview of the Scheme.  Some other
products have also been taken out and the rest would be phased out by 31
st March, 2003.  It may be
mentioned that the Scheme is funded by Industry itself from payment of jute cess.
Para. 57:
Q.263 Can India confirm whether the Government retains the ability to re-institute the export quota
on cotton yarn, the purpose of which is to ensure an adequate supply of this input for the domestic
textile industry, and if so, what circumstances would lead or require the Government to reintroducethe restraint?
In tune with the Policy of liberalization and re forms, the export restrictions on raw cotton, cotton
waste and cotton yarn have been done away with so as to allow free inter-play of market forces.
There are no restrictions on export of textile products.  There is no proposal at the moment to
reintroduce the export restrictions on any of the textile products.  However, Government retains theability to reintroduce export restrictions if situation so warrants.
Internal measures (para. 59)
Q.264 Please provide information about the scope and use (budget and actual use) of the scheme
since its inception.  Also, please confirm whethe r the Technology Upgradation Fund Scheme has been
notified to the Subsidies Committee in accordance with Article 25 of the Agreement on Subsidies and
Countervailing Measures.  If this assistance program has not yet been notified, please indicate when it
will be notified.
There is a provision of Rs.2.5 billion for implementing the Technology Upgradation Fund Scheme
(TUFS) during the current fiscal year 2002-03.  The Scheme has been introduced with the objective of
providing loans at internationally comparable rates to meet the modernization and technological
requirements of the textile industry.  It is equally applicable to the domestic and export enterprises
across the board and it does not impose any export obligation on the beneficiary units.  Further, theindustry itself is indirectly paying for the Scheme through collections of Additional duty of Excise on
Textiles & Textile Article and thus the financial contribution is coming from the industry itself.
Para. 60:
Q.265 Can India provide details as to what exactly are the “appropriate” export-import intervention
measures regarding raw cotton, and provide supporting GOI laws and/or regulations that provideauthority for such measures?
Export and import of raw cotton is freely allowed.
Para. 64:
Q.266 Can India confirm that the garment quota on “FTA” imports from Sri Lanka, at a total of
6.67 million pieces, represents access for approximately 1 Sri Lankan garment for every 150 IndianWT/TPR/M/100/Add.1
Page 94
citizens, and if this calculation is generally correct, is this consistent with the purpose and objective of
Article 24?  Given that, according to India’s data in  table A.I.3, India’s global imports of garments are
at very low levels, is this limitation really necessary?
A Free Trade Agreement (FTA) was signed on 28.12.1998 between both the countries.  The FTA was
operationalized on 1.3.2000.  The FTA allows for the export of garments to India with 50% tariff
concessions subject to (a) annual restriction of 8 milli on pcs. out of which fabric for 6 million pcs. has
to be sourced from India and (b) no category of garments can exceed 1.5 million pcs. per annum.
This is a bilateral Agreement, the terms of whic h have been agreed between India and Sri Lanka, and
the same has been notified under “Enabling Clause”.
Q.267 Specifically regarding rules of origin for textile and apparel products, can India confirm that it
does not maintain any rules for determining the origin of non-preferential imports?  Is a declaration of
country of origin required with an importation of textile products into India?  If so, for what purpose?If so, can India confirm that its Customs (or other relevant officials, including if appropriate, at the
sub-federal level), would accept without objection an y declaration of country of origin stated by a
importer?  Where is this provided for in India’s law or regulation?  Are goods required to be marked
according to country of origin? Is India considering any change in its policy regarding rules of origin
for non-preferential imports?
India doesn’t maintain any rules for determin ing the origin of non-preferential imports.
Q.268 With respect to standards and testing, can India explain the procedures and requirements that
apply to imports of textile products, as well as a citation to law or regulation that provide for such?
Does India maintain an ombudsman or other office for the resolution of disputes that arise under
standards and testing requirements?  Or must such disputes be taken to court in India?
Import of Textile & Textile Articles in India is permitted subject to the condition that they shall not
contain any of the hazardous dyes whose handling, production, carriage or use is prohibited by theGovernment of India under the provisions of clau se (d) of sub-section (2) of section 6 of the
Environment (Protection) Act, 1986 (29 of 1986) re ad with the relevant rule(s) framed thereunder.
For this purpose, the import consignments hall accompany a preshipment certificate from the
National accredited Agency of the country of orig in certifying that the import consignments do not
contain any of the hazardous dyes.  The import consignments accompanied by such certificates arecleared by customs without any further testing in India.  In cases where such certificates are not
available, the consignment will be cleared after testing of the same from the notified laboratories in
India.  For this purpose, Government of India ha ve notified 12 state-of-the-art eco laboratories which
are manned by qualified personnel.
Moreover, certain textile products irrespective of whether these have been manufactured indigenously
or imported are required to contain all the statutory markings as envisaged vide Clause 3(e) of the
Textiles (Consumer Protection) Regulations, 1988.  The main objective behind prescribing the
marking regulations is to ensure that the consumer has the information regarding specifications of
cloth/material, which he is intending to purchase.  The Regulations do not discriminate against
imported products vis-à-vis indigenous products.  The Regulations are notified in the official Gazetteof India and are freely available to the public.  India does not maintain an ombudsman.  For any
dispute, the remedy lies in administrative appeals/judicial appeals.WT/TPR/M/100/Add.1
Page 95
Telecommunications
Q.269 Para 97:  Most countries are in the process of privatizing their state-owned
telecommunications carriers (WT/TPR/S/100 ; page 127; para. 97).  Does India currently have specific
plans and a timetable to privatize BSNL and MTNL?  If not, is the Government actively considering
such action?
There is no immediate plan under consideration by the Govt. to privatize BSNL and MTNL.
Q.270 Para 98 :  Given India's expressed desire to attract  large sums for investment for its telecom
infrastructure, please explain why the ceiling of 49 percent foreign ownership still remains in the
basic telecom sector (WT/TPR/S/100 ; page 128; para. 98).  Is this limit based on statute or is it a
policy guideline that can easily be changed?
Ceiling of 49% Foreign ownership in Basic Te lecommunication Services is a policy decision.
Q.271 Para 98 :  There is mention of the division of  the Department of Telecommunications
Services, now BSNL, from the Department of Telecommunications, an effort to separate the service
provider from the entity that formulates telecom policy and licenses service providers .
(WT/TPR/S/100 ; page 131; para. 98) .  What concrete steps have been taken to guarantee that the
government's Department of Telecommunications doe s NOT still exercise undue influence or control
over the operations of the government-owned BSNL?  What evidence is there that this has been more
than just a change introduced on an organizational chart?  For example, does BSNL staff now occupy
separate buildings?  Does BSNL have management officials that were not previously affiliated with
DOT?  Are there procedures in place to ensure that DOT deals with BSNL on an arms-length basis,
the same way it might deal with any private telecom operator in India?
The management for operational activities is controll ed by the Board of Directors appointed in the
PSU.  99% of the staff is no longer Government sta ff.  It is true that first lot of BSNL Management
officials are drawn from the officers previously affiliated with DOT.
The BSNL Head Quarter is functioning from a sepa rate building, Statesman  House & Indraprastha
Hotel taken on rent.  Most of its Staff is shifted there and the remaining are also in the process of
being shifted.  The  BSNL, MTNL & the Private Telecom Operators in India are treated at par.
Labour
Q.272 WTO Ministers renewed their commitment to the observance of internationally recognized
core labour standards in the 1996 Singapore Declar ation, as well as in the 2001 Doha Declaration.
Recognizing that there is a connection between labou r standards and trade issues, we believe that the
subject of implementation of core labour standards is relevant for TPRM reviews.  In reviews of other
countries, the United States has raised questions about the application of core labour standards.  In
that spirit, we would like to raise a few questions about India’s adherence to internationallyrecognized core labour standards.
(6) The Constitution in India provides for the rights of association, and the Government generally
respects this right in practice.  Further, the right of workers to bargain collectively has existed
for decades.WT/TPR/M/100/Add.1
Page 96
(6) On the other hand, the problem of child labour in India is immense and complex.  Child
labour, including forced and bonded child labour, as well as employment of children inhazardous industries, exists in many parts of India.
(7) We note that the Government of India is committed to the eventual elimination of child
labour, with a particular priority toward the elimination of child labour in hazardous
industries.
(8) We are pleased that the U.S. Department of Labor and the Ministry of Labor have agreed to
support a new project in ten hazardous industries through the ILO's International Program for
the Elimination of Child Labor (IPEC).
We believe that ILO is the only forum to deal with the issue of core labour standards.  Our views
regarding linkages of trade with such extraneous issues is well known.  WTO and trade policy review
are not the forum to discuss these issues.
THAILAND
Secretariat Report (WT TPR /S/100)
Para.  14 page 28
Q.273 According to the Report, the rectifications and modifications of India’s Schedule have
resulted in an increase in a number of tariff lines.  Nonetheless, pursuant to Article XXVIII.3 ofGATT 1947, these higher rates are applied to a few products that are of interests to Thailand, notably
alcoholic products and fabrics.  This results in the applied tariffs being higher than their final bound
rates.  Given that the current MFN rates are generally lower than most final bound tariffs, we would
like to know whether or not India considers bringing applied tariffs that are still higher than final
bound rates to be in line with the latter.
All applied tariffs in India are within the bound levels.
Para. 15 page 28Q.274 In its notifications to the Committee on Market Access, India reserved rights under Article
XXVIII:5 of GATT 1994 to modify its Schedule during the three-year period from 1 January 2000 to
31 December 2002 .  We would be interested to know if ther e is any development relating to India’s
intention to modify or withdraw such concessions.
India has reserved its right to modify its schedule  under Article XXVIII:5, to enable it to amend any
tariff, if there is the necessity.  Before carrying out any modifications, India will notify the WTO
Members and follow the procedure as laid down.
Para. 31 Page 37
Q.275 The Report states that additional duties (Ads) are imposed on imports in place of a complex
system of central excise duties, the purpose being to correct the excise duty’s bias in favour ofimports.  Owing to the complexity of the excise tax structure, it is not clear, however, whether the AD
actually imposed on each item corresponds to the excise tax levied on that item.  We would like to
seek further clarification as to how India administers the functioning of AD imposition to correct the
said bias brought about by the excise duty.WT/TPR/M/100/Add.1
Page 97
The excise duty structure is not at all complex.  There are only two major ad valorem rates, namely,
16% adv. which applies to almost all the excisable goods and an additional levy called ‘special exciseduty’ of 16% adv. on  8 items specified in reply to question No. 231.  As the domestically produced
goods suffer excise duty as mentioned above,  the imported goods are subject to additional duty of
customs at these rates.
Para. 32 Page 37
Q.276 An across-the-board 4 per cent special additional duty (SAD) was recently introduced on
most imports with a view to removing or reducing the pro-import bias resulting from the application
of state sales taxes to similar domestically produced goods .  As the Report points out, the introduction
of SAD may not be equivalent to sales taxes, the reason being that domestically produced goods may
face higher or lower rates of sales tax .  In this regard, we would like to know the rationale for
applying the SAD to most imports, rather than applyi ng it to certain selected items that need to be
rectified.
Please refer to answer to Q.94.
Para. 34 Page 38
Q.277 The Report states that India notified the WTO of  its removal of restrictions on imports that
were maintained under GATT Article XVII: B in 2001/02 .  It  further says that ,” It appears that the
Special Import Licence, which was accorded to certain importers, has been discontinued since
1 April 2001.” With the discontinuation of the Sils, we wish to know whether there may be any other
import requirements being introduced apart from those measures already put in place, notable the
additional and special additional duties (ADs and SADs), and minimum import prices.
India has removed quantitative restrictions which were being maintained on account of BOP reasons
under Article XVIII of GATT.  It is confirmed that Special Import Licence (SIL) scheme has also been
discontinued.  After removal of import restrictions and discontinuation of SIL scheme no importrestriction has been put in place.  For details about additional duty and SAD please see answers to
Q.275 and Q.94.  Minimum floor price was imposed on certain  steel items on 10.12.1998.  However,
Government of India decided to remove minimum floor  price restriction on import of prime steel items
and accordingly, vide notification no. 31 dated 1. 11. 1999, price restriction on prime steel items were
withdrawn with effect from 1. 1. 2000.  However, this withdrawal notification has been challenged
before High Court of Kolkata and matter is sub-judice.
Para. 35 Page 39
Q.278 From the Report, the Indian authorities imposed the requirement that, as of December 2001,
all imports of natural rubber must be carried out through the ports of Kolkata and Visakhapatham.
We believe that this port-of entry requirement has constituted such an impediment to Thailand’srubber trade that out export interests in the Indian market have been hampered considerable, We
would be grateful for India’s clarification on this  restrictive requirement, and to know whether it
would be possible to increase the number of ports through which imports of rubber could be carried
out.
Import of natural rubber is freely allowed.  However , in order to ensure better monitoring of quality
standards, which are already applicable and are being complied with by domestic producers, it has
been prescribed vide notification no. 41.  Dated 19. 12. 2001 that import of natural rubber shall beWT/TPR/M/100/Add.1
Page 98
allowed through Kolkata and Vishakapatnam ports only.  As the major area of import of natural
rubber is South-East Asia, these two ports  in Eastern India have been specified.
Para. 38 Page 40
Q.279 Indian maintains minimum import prices on seconds and defective steel products for safety
and human health reasons.  We would appreciate clarification as to the justification for the adoption of
the measures on human health grounds.
The Seconds/defectives grades are sometimes exported to India at very low prices.  It is therefore
necessary to regulate the prices to ensure that s econds/defectives are utilized only for the authorized
end-uses.  Misutilization of seconds/defectives also has serious safety/health implications viz.
- Items like Tinplate, Tinfree steel etc. are utilized for packing food products.  The utilization of
seconds/defectives poses a health hazard since they contain tinning defects which accelerate their
corrosion and deterioration and consequently reduces the shelf life of the packed food leading tocontamination.
- The defective Galvanized sheets/coils if utilized for watertanks, galvanized pipes for water
transportation etc. may corrode, resulting in contamination of water.
- Utilization of seconds/defective steel products for the manufacturing of
equipment/components in lieu of prime qual ity also poses a safety and health hazard.
Para. 82 Page 64
Q.280 According to the Report, duty exemptions or  rebates and tax concessions for imported inputs
are employed to reduce or remove the anti-export bias and to encourage exports,  These measures
come under several schemes such as the Export Promotion Capital Goods (EPCG), Duty Entitlement
passbook (DEPB) and Duty Free Replenishment Certificates (DFRC).  We appreciate that Indian
exporters are entitled to these  schemes.  Could India advise if these concessions are also available to
importers who manufacture goods for domestic consumption?
Exporters of goods are provided exemption/remission of duties suffered on the inputs required for the
export products through various schemes like Advance Licence, Duty Free Replenishment Certificate
(DFRC), Duty Entitlement Pass Book Scheme (DEPB)  etc., which is permissible as per WTO rules.
Duty free imports are allowed only for export and only exporters can make applications under these
schemes.  Importers requiring goods for domestic consumption cannot make applications under theseschemes.
PAKISTAN
Q.281 Para 35 of Secretariat Report states import restrictions maintained by India on a number of
items for health, security and public morals that includes, inter alia, jewellery .  Would the Indian
Authorities kindly indicate the rationale of putting jewellery under restricted list?
India has already removed import restrictions on import of jewellery items on 31 March 2002, as
appearing under Chapter 71 of  ITC(HS) Book.
Q.282 Para. 128 of Secretariat report mentions a number of ‘implicit’ and ‘explicit’ subsidies that
are distortionary in nature.  Would the Indian authorities kindly explain the modus operandi orWT/TPR/M/100/Add.1
Page 99
rationale of these subsidies in terms of WTO framew ork? We would also like to know the future plans
about the subsidies.
Reference may be made to para. 22 of the Government report which indicates some of the steps
proposed to be taken by the Government in respect of the subsidies.  The Annual Budget for 2002-
2003 has also emphasized reduction of subsidies to a minimum over the next three to five years.
Q.283 Para 11 of Secretariat report indicates an increase in the average applied tariffs on agricultural
items from 35% in 1997-98 to 41% in 2001-02 on items removed from quota restriction .  The WTO
framework, on the other hand, seeks to reduce tariffs .  Would the Indian authorities explain the
compulsions of increasing tariffs on these items?
Though the bound rates for primary and processed agricultural products are 100 and 150 per cent,
the applied rates are lower for most of the products.  Agriculture is a way of life for the developing
countries like India having nearly two third of the population dependent on it.  Majority of thispopulation are resource poor and having small farms.  The tariff modulation in consonance with
international price fluctuations at times becomes necessary for their food and livelihood security.
Q.284 Para 12 of Secretariat report indicates that India has higher MFN applied rates as compared
with its bound rates under WTO on a number of items.   Pakistan would like to know the Indian
Government plans in this regard?
As already stated in reply to Q.273, all applied tariffs in India are within the bound levels.
Q.285 Para. 17 of Secretariat report mentions that higher domestic prices in comparison with
international prices for exportable such as sugar, wheat, rice etc. make Indian exports less competitive
in international market.  Contrary to this India is a leading exporter for example, for rice as its c.i.f.
prices are lower than its competitors.  Would the Indian Authorities kindly explain the kind of
incentives/subsidies being extended in the export sector and their rationale in the context of
GATT/WTO?
Please refer to India’s notifications on export subsidies for the year 2000-01 (G/AG/N/IND/3).  As a
developing country India is not required to undertake commitments in respect of the export subsidies
listed in Article 9.1 (d) and (e).
Q.286 Para 19 of Secretariat report mentions export prohibitions for a number of agricultural items.
The GATT framework encourages price-based measures only.  Would Indian Authorities pleaseintimate the future plans on these non-price based measures?
Q.287 Para 20 of the Secretariat report indicates maintenance of  export prohibitions that are against
GATT provisions.  Pakistan would like to know the programme of phasing out of these prohibitions
and substituting these with price based measures.
Q.288 Para 20 of  Secretariat report points out quota restrictions on export of certain Agricultural
products.  Pakistan would like to know if these quota restrictions have been notified to WTO?
Q.289 Para 21 of Secretariat report mentions maintenance of Minimum Export prices for onions.
Would the Indian authorities like to  inform whether this has been notified to WTO?
Answers to Q.286, Q.287, Q.288 & Q.289.  In the last few years there have been progressive and
continuous liberalization in so far as export of agricultural commodities are concerned.  NoWT/TPR/M/100/Add.1
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additional restrictions have been imposed on agricultural commodities during the last three years.
Major items which have been made free for exports during this  period are pulses, tea, wheat, wheatproducts, coarse grains, rice (non-Basmati), sugar, raw cotton and ten variety of agricultural seeds
and planting material.  Export of onion is free ly allowed through the designated State Trading
Enterprises. ITC(HS) book does not stipulate any MEP for export of onions.  However, STEs
prescribe MEP on export of onions.  Even export restrictions on export of hides and skins have also
been removed.  However, exports cess has been prescribed on export on hides and skins which is fullyWTO compatible.
ADDITIONAL QUESTIONS ON BEHALF OF THE EUROPEAN UNION
Additional duties (para. 31)
Q.290 The report by the WTO Secretariat draws atte ntion to the existence of additional duties on
imports in lieu of the excise duties to which Indian products are subject.  The European Union wishesto express its concern following the introduction of an additional duty on imports of alcoholic
beverages.  The relevant text, which entered into force on 1 April 2001, provides that, for products
under tariff headings 2204, 2205, 2206 and 2208, ad valorem  duties of between 75 and 150 per cent
will be applied at the time of importation into India, in addition to customs duties.  This duty is
supposed to represent a tax equivalent to the excise duties to which Indian products are subject.
1
However, the Indian measure at issue provides for a level of taxation on imported goods that is much
higher than most of the taxes applied by Indian states on domestic goods of the same nature.
Could India therefore explain how, with the applic ation of additional duties, it intends to preserve
equality of treatment between domestic and imported products?  In particular, how does India justify,
in the light of Article III.2 of the GATT, the difference between the additional duty on imported wines
and spirits and the taxes imposed by the Indian states on domestic products?
Please see reply to Q.93.
Special additional duty (para. 32)
Q.291 The Secretariat report refers to the introduction of a special additional duty of 4 per cent,
which is supposed to represent a "taxation equivalent" in relation to domestic products.  However, in
the majority of cases, imports are not consigned directly to a final user but to an intermediate
wholesaler who then resells them.  Thus, imported pr oducts are subject to double taxation:  the special
additional duty of 4 per cent and local taxes when the product is resold on the local market.
How does India guard against the risk of double taxation in respect of the special additional duty and
local taxes?  In particular, how does India intend to avoid double taxation on goods not directly
intended for a final user but for an intermediary?
Please refer to reply to Q.94.
Standards (paras. 48 and 49)
Q.292 The Secretariat report rightly emphasizes the participation of the BIS in the work of the ISO
and the IEC.  However, it would appear that intern ational standards are still inadequately incorporated
in Indian standards.
                                                     
1 This arrangement could be justified on the basis of Article II.2(a) of the GATT, which allows the
imposition on imported products of internal taxes equivalent to those imposed on the like domestic product.WT/TPR/M/100/Add.1
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Could India clarify the efforts being made to bring Indian standards more closely into line with
international standards, particularly those enacted by the ISO and the IEC?
It has always been endeavor on the part of BIS, the national standardizing body, to harmonize various
standards with the relevant international standards. However, for various reasons like fundamental
geographical, climatic or technological problems, it is not always possible to adopt an international
standard always in toto.
Therefore, the Technical Committee of BIS, a Body of national experts on relevant subject, considers
the International standards for adoption as Nati onal standards under the Dual Numbering System of
ISO/IEC and if found appropriate in the light of re asons explained above, adopts   them with a
national Foreword.
In cases where an Indian standard is not totally equivalent to the corresponding International
standard due to above mentioned constraints, the Foreword of these standards mentions theequivalence, differences and reasons for the same.  [Please also refer to reply to Q.11].
Certification (para. 50)
Q.293 For purposes of registration and licence application formalities, the foreign exporter must
have a liaison office or a commercial subsidiary in India.  He cannot have recourse to an agent
(importer, distributor).  Indeed, the licence application must be submitted through a subsidiary or the
Indian office of the foreign company.  In addition, the exporter must provide proof of authorization
from the Indian authorities to open such an office in India.  Finally, the foreign manufacturer
undertakes not to relocate his office within Indian territory without authorization from the BIS.
What measures have been adopted by India to simplify certification procedures?  More particularly,
how does India justify the obligation to have a liaison office or a subsidiary in order to fulfil the
registration and licence application formalities?
The Foreign Manufacturers Certification Scheme is being operated under the Bureau of Indian
Standards Act, which contains a number of legislati ve provisions including liabilities for violation of
certain provisions.  In order to meet the statutory provisions, it has been considered necessary to
make some person legally liable for non-adherence to such statutory provisions. Accordingly, an
arrangement has been worked out to create this liability upon the Indian liaison/branch office of the
foreign manufacturer. This arrangement is working satisfactorily.
However, in order to simplify  the matter further, while keeping the provision for liabilities intact, the
issue of permitting appointment of an Indian agent located in India (who would accept the liabilities
under the Act on behalf of the foreign manufact urer through an agreement/undertaking)  is being
considered.
Labelling (para.55)
Q.294 The Secretariat report refers to notification No. 44 of 24 November 2000 (notified to the
WTO on 28 May 2002), describing the information which must compulsorily be carried, prior to
customs clearance, on the labels of pre-packaged goods imported into India.  Such compulsory
information includes the maximum sale price (including local taxes, freight and transport charges).
This regulation constitutes an onerous requir ement for the following three main reasons:WT/TPR/M/100/Add.1
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- In marketing terms, the maximum sale price is in most cases considered by retailers
as the actual sale price, which prevents the sale of the product at a substantially lower
price;
- This price is difficult to calculate prior to customs clearance, inasmuch as the
destination of the product is not always known at the time of importation and local
taxes may vary from one federal state to another, or indeed from one town to another.
- Precise knowledge of the maximum price is necessary, since it is sometimes used as a
basis for certain local taxes.
How does India justify the requirement that the label must carry information on the maximum price,
prior to customs clearance, when it is difficult to calculate the price in question at that stage, since the
destination of the product is not always known at the time of import and local taxes may vary from
one federal state to another, or indeed from one town to another?
Please see reply to Q.52.
Sanitary and phytosanitary measures (para. 51)
Q.295 The European Union wishes to express its concern in the wake of a notification by the
Ministry of Health, dated 29 September 2000, which entered into force on 29 March 2001, and which
toughens the standards applicable to mineral waters and aerated waters.  These new standards are
stricter than those contained in the Codex Alimentarius, particularly in respect of pH levels.  Theymake it impossible to import certain mineral waters.  Others have been deemed not to comply with the
new Indian standards because of the presence of nickel, silver, magnesium, lead and cadmium in
excess of the limits authorized by India.
Could India explain how it intends to incorporate international food standards in its legislation,
particularly as regards the Codex Alimentarius?  Could India explain how it justifies the toughening
of the standards applicable to mineral waters and aerated waters (Notification by the Ministry of
Health dated 29 September 2000)?
1) pH : Codex has not prescribed any requirement for pH. The requirement of pH prescribed
under PFA Rules, 1955 are based on our National guidelines prevalent in India and which is
allowed for supply of water in the country as well as WHO guidelines.
2) Requirement of Lead, Nickel and Cadmium has been prescribed as per the Codex guidelines.
3) Codex has not prescribed the requireme nt for Silver and Magnesium in Natural
Mineral Water. The requirement of Sil ver and Magnesium prescribed in these
products are based on our national guidelines on water.
4) The step is fully compatible with the Article III of GATT, 1994(national treatment) and
Agreement on SPS.
Customs valuation and clearance (para. 9)
Q.296 The Secretariat report rightly draws attention to the efforts undertaken by India to simplify
customs clearance procedures.  However, the French delegation remains concerned at the introduction
of systematic customs controls on agri-food produc ts.  Circular No. 36/2001 of the Central Board ofWT/TPR/M/100/Add.1
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Excise and Customs, dated 15 June 2001, concerni ng the customs clearance of agri-food products,
requires that every consignment be subject to inspection and tests.  This measure pushes up import
costs, inasmuch as importers bear the costs of warehousing and testing.  In addition, it lengthens the
time required for customs clearance, which may last as long as several weeks before the results are
known.  Finally, this measure constitutes a de facto penalty on perishable goods, and there is a risk of
goods spoiling because of poor storage conditions.
How does India intend to facilitate the customs clearance of agri-food products.  How does it justify
the introduction of systematic customs controls on agri-food products?
Ans. The Prevention of Food Adulteration Act, 1954 and Prevention of Food Adulteration Rules,
1955 are applicable on all foods for domestic sales as well as for imports.  In general, the provisions
under PFA rules cover all aspects related to prescribing standards for food items, laying down
procedure for sampling and regulating the production for sale, storage for sale and sale of foodproducts with particular reference to health safety and protection of consumers.  The standards
prescribed under Appendix B of the PFA rules are minimum attainable mandatory standards.
Violation of these standards entails penalties under the PFA act.  Imported food products also need to
conform to these requirements.
Compliance of PFA Act has been made mandatory on import of  edible/food products, vide DGFT
Notification no. 3 dated 31.03.2001(copy enclosed) also. These provisions were already applicable on
imported products as per the PFA Act.  Further, as per Exim Policy, all imported goods shall also be
subject to domestic laws, rules, orders, regulations , technical specifications, environmental and safety
norms as applicable to domestically produced goods. These provisions are well within the WTO
mandated ‘National Treatment’ clause.  Department of Revenue have, accordingly, issued  Circular
No. 58/2001 dated 25.10.2001 in this regard.  This circ ular prescribes that all consignments of food
products shall be referred to PHOs for testing and clearance shall be allowed only after receipt of testreport.  However, the perishable food items like fruits, vegetables, meat, fish, cheese, etc. have quick
turn over and which, once opened, can lead to quick spoilage, if not kept in refrigerated conditions.
On import of such items for direct use by the import ers such as, hotels, etc., the consignments are not
to be subject to drawal of samples and testing prio r to clearance of the same. Such items are cleared
relying on the certificates from the internationally known testing labs or government labs about theseproducts conforming the food safety and quality of such products. However, if perishable items such
as raw meat, fish etc. are not meant for direct use by the importer, samples are  taken and tested prior
to clearance of the same.  The text of the aforesaid circular of the Department of Revenue is available
on the website http://www.cbec.gov.in .
Also please refer to answer to Q.135.
Foreign investment regime
Q.297 European Union welcomes the progress made by India, as referred to in the Secretariat report,
in liberalizing the investment regime.  However, it would stress that foreign investment is still made
difficult by burdensome taxation (for example, a rate of 48 per cent is applied to the income of non-
resident enterprises) and by the gaps, complexity and lack of harmonization among states in the fieldof labour legislation.WT/TPR/M/100/Add.1
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How does India intend to continue its efforts to create an investor-friendly environment?  In
particular, how does it plan to advance the harmonization of labour legislation and introducereasonable rates of taxation?
To attract more Foreign Direct Investment (FDI ) into the country, Government has already put in
place a dynamic, transparent and investor-friendly FDI policy.  Further with the switchover from
positive list approach to negative list approach in February, 2000, most activities, including services,
have been placed on the automatic route without any restriction on the extent of foreign ownership.At post establishment stage, by and large there is a national treatment.  There are very few entry-level
requirements (restrictions in the form of minimum capitalization norms, FDI caps etc).  There are no
other operational restrictions, including restrictions  on recruitment of expatriate employees.  The
Foreign Investment Implementation Authority (FIIA) set up in the Ministry, acts as a single point
interface between the investor and the Government agencies including Administrative Ministries/State
Governments to facilitate quick implementation of FDI approvals.  Please also see reply to Q.72.
Intellectual property (paras. 153 to 194)
Q.298 In overall terms, the Secretariat report ri ghtly points to an improvement in the level of
legislative protection for intellectual property rights in India.  Nevertheless, the measures
implemented to enforce those rights are still insufficient to curb the phenomenon of counterfeiting.
With regard to geographical indications, the report states that indications are registered for ten years,
with the possibility of renewal for a further period of ten years.  Article 24.9 of the WTO TRIPS
Agreement provides that the obligation to protect geographical indications ceases to apply when such
indications are not or cease to be protected in their country of origin, or fall into disuse in that country.
(i) How does India intend to combat counterfeiting?  What punitive and judicial measures does
India intend to implement in order to improv e the means of enforcing intellectual property
rights?
The Trade Marks Act, 1999 provides for criminal and civil penalties for infringement of the rights of
the trademark owner. As per Section 103 of the Trade Marks Act, 1999, any person who falsely uses a
trademark shall, be punishable with imprisonment for a term which shall not be less than six months
but which may extend to three years and with a fine which shall not be less than fifty thousand rupees
but which may extend to two hundred thousand rupees. As per the provisions of section 104, anyperson who sells, shall, be punishable with impris onment for a term which shall not be less than six
months but which may extend to three years and with a fine which shall not be less than fifty thousand
rupees but which may extend to two hundred thousand rupees. As per Section 105 of the Trade Marks
Act, 1999, second or subsequent offenders are punishable for the second and for every subsequent
offence, with imprisonment for a term which shall not be less than one year but which may extend tothree years and with a fine which shall not be less than one hundred thousand rupees but which may
extend to two hundred thousand rupees. Section 111 provides that where a person is convicted under
Section 103, 104 or 105 or is acquitted, the court convicting or acquitting may direct the forfeiture to
the Government of all goods and things by means of or in relation to which the offence has been
committed.  The Court may order any forfeited articles to be destroyed or otherwise disposed of as thecourt thinks fit.
The Trade Marks Act, 1999, provides for relief in suits for infringement or for  passing off.  It states
that an order passed by the District Court or any Superior Court on appeal, may include an ex parte
injunction or any interlocutory order for any of the following matters for discovery of documents;
preserving of infringing goods, documents or other evidence which are related to the subject matter ofWT/TPR/M/100/Add.1
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the suit; or for restraining the defendant from disposing of or dealing with the assets in a manner
which may adversely affect the plaintiff’s ability to recover damages, costs or other pecuniaryremedies which may be finally awarded to the plaintiff.
(ii) With regard to geographical indications, how does India justify the ten-year limit (with the
possibility of renewal) on the registration of geographical indications, whereas the TRIPS
Agreement provides for continued protection as long as the indication exists and is protected
by the authorities?
It is quite possible that a registered geographical indication may have become generic or have ceased
to be protected in the country of origin.  Therefore, provisions for renewal and rectification have been
incorporated.  The renewal fee is payable as indicated in the Notified Rules.
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