WORLD TRADE
ORGANIZATIONG/STR/N/7/IND
8 October 2001
(01-4863)
Working Party on
State Trading EnterprisesOriginal:  English
STATE TRADING
New and Full Notification Pursuant to Article XVII:4(a) of the GATT 1994
and Paragraph 1 of the Understanding on the Interpretation of Article XVII
INDIA
The following communication, dated 4 October 2001, has been received from the Permanent
Mission of India.
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1. Enumeration of Stat e Trading Enterprises
The State Trading enterprises, which have been granted special privileges on export or
import, are:
Export privileges:
Name of the Enterprise ITC HS Code Item
National Cooperative Consumers’
Federation of India Ltd.0703(1) Onions (all varieties other than Bangalore
Rose Onion & Krishnapuram Onions)
1207 Niger seeds National Agricultural Cooperative
Marketing Federation of India Ltd.0703(1) Onions (all varieties other than Bangalore
Rose Onion & Krishnapuram Onions).
National Dairy Development Board 1207 Niger seeds
1207 Niger seeds Karnataka State Agricultural ProduceProcessing and Export Corporation
Ltd.0703(2) Bangalore Rose Onion.
AP MARKFED (Andhra Pradesh
Marketing Federation)0703(2) Krishnapuram Onion
Gujarat Agro Industries Corporation
Ltd., Ahmedabad0703(1) Onions (all varieties other than Bangalore
Rose Onion & Krishnapuram Onions)
M.P. State Cooperative OilseedGrower’s Federation Ltd.1207 Niger seeds
1207  Niger seeds Tribal Cooperative Marketing
Development Federation of India Ltd. 1301 Gum Karaya.
Maharashtra State Agricultural
Marketing Board0703(1) Onions (all varieties other than Bangalore
Rose Onion & Krishnapuram Onions)G/STR/N/7/IND
Page 2
Name of the Enterprise ITC HS Code Item
Andhra Pradesh State Trading
Corporation0703(1) Onions (all varieties other than Bangalore
Rose Onion & Krishnapuram Onions)
Spices Trading Corporation Ltd. 0703(1) Onions (all varieties other than Bangalore
Rose Onion & Krishnapuram Onions)
2601(d) Iron Ores Concentrate prepared by
beneficiations and or concentration of
low-grade iron ore containing 40 per cent
or less of iron produced by Kudremukh
Iron Ore Company Ltd.Kudremukh Iron Ore Company Ltd.
2601(e) Iron Ore pellets manufactured by
Kudremukh Iron Ore Company Ltd. out
of concentrates produced by it.
2601 Iron ore above 64% Fe
2602 Manganese ores below 46% Mn
2610(b) Chrome Ore lumps with Cr 2O3 not
exceeding 38%
2610 (c) Low silica, friable ore with Cr 2O3 not
exceeding 52% and Silica exceeding 4%.Minerals and Metals Trading
Corporation (MMTC)
2525 Mica scrap
Manganese Ore India Ltd. 2602 Manganese ores below 46% Mn
2710(e) Kerosene
2709 Crude OilIndian Oil Corporation
2710 Liquified Petroleum Gas
2614 Rare earths (including Yttrium) ores,
concentrates and compounds thereof
2617 Other minerals containing the following
substances as accessory ingredients
including:
Samerskite
Uraniferrous allanite Radium ores and
concentratesIndian Rare Earths Ltd.
2618 Granular sillimanite produced by Indian
Rare Earths Limited, and Kerala Mineralsand Metals Ltd.
2617 Other minerals containing the following
substances as accessory ingredients
including:
(a)Samerskite
      (b)Uraniferrous allanite Radium ores
and concentratesKerala Minerals Metals Ltd.
2618 Granular sillimanite produced by Indian
Rare Earths Limited, and Kerala Mineralsand Metals Ltd.G/STR/N/7/IND
Page 3
Import privileges:
Name of the Enterprise ITC HS Code Item
Indian Potash Limited. 310210.00 Urea, whether or not in aqueous
solution.
10011000.2010019002.00
10019003.90Wheat
10020000.20 Rye
10040000.20 Oats
10059000.20 Maize
10061000.90
10062000.00
10063001.00
10063002.0010063009.00
10064000.00Rice
100700.20 Grain SorghumFood Corporation of India.
10081000.90
10082001.90
10082003.90
10082004.90
10083000.90
10089000.90Buckwheat, millet, canary seed, jawar,
bajra, ragi, other cereals.
310229.01 Ammonium Sulphonitrate Minerals and Metals TradingCorporation 310210.00 Urea
27100001.10 All types of Motor spirit (Gasoline)
27100001.20 All types of aviation spirit
271000.02 All types of spirit type (gasoline type)
jet fuel
27100011.90 Kerosene type jet fuels (Aviation
turbine fuel)
271000.21 Diesel gas oilIndian Oil Corporation
271000.29 Other gas oil
120300.00 Copra
151311.00 Crude Oil  (Coconut oil and its
fractions)
151319.00 OtherState Trading Corporation
310210.00 Urea.
120300.00 Copra
151311.00 Crude Oil  (Coconut oil and its
fractions)Hindustan Vegetable Oil Corporation
151319.00 Other
2. Reason and purposes for introducing a nd maintaining State Trading Enterprises
The objectives of granting special privileges on export or import of certain products are the
following:G/STR/N/7/IND
Page 4
EXPORT
(i) Export privileges for some agricultural and minor forest produce, which are grown or
harvested by large numbers of small farmers or tribal have been given to state trading
enterprises to enable better marketing, realization of better prices, ensuring steady domesticsupply and preventing wide domestic price fluctuations.
(ii) Similarly for ensuring reliable supply of kerosene and LPG, which are used as domestic fuels,
exports are allowed only through state trading enterprises.  Exports by state trading
enterprises are found necessary for conservation and proper utilization of some ores of metals
and rare earths.
IMPORT
The government procures food grains and certain select agricultural items from farmers at a
remunerative minimum support price.  This ensures India's small and marginal farmers a fair return on
their investment.  The procured food grains and certain select agricultural items are then suppliedthrough the public distribution system at variable prices, some of it at market prices and some at
heavily subsidized rates for th ose living below the poverty line.  The State Trading Enterprise
domestically procures and imports depending on the market supply situation and the demand.  Such
operations performed by the state trading enterprises enables effective monitoring of the supply
situation which in turn can ensure that concerns relating to food security are appropriately addressed.In the case of petroleum products, imports/exports are undertaken at market related prices.  Regarding
domestic pricing, a system of cross subsidisation of fuels i.e. subsidisation of kerosene and LPG (used
as domestic fuel) by ATF and gasoline, is presently in place necessitating imports through a single
monitorable route.  Regarding fertilizers, India has a differential subsidy system in place to ensure
availability for all farmers.  The subsidy is provided on both imported as well as on domesticallyproduced urea, again state trading is necessary to properly implement and manage this system."
3. Description of the functioning of the state trading enterprises
A. The exclusive right to export or import is granted to an enterprise under the provisions of
Paragraph 4.8 of the Export and Import Policy.  This policy requires that any good, the import or
export of which is governed through exclusive or special privileges granted to State TradingEnterprise(s), may be imported or exported by the State Trading Enterprise(s) as specified in the ITC
(HS) Classification of Export and Import Items book subject to the conditions specified therein.  The
Director General of Foreign Trade may, however, grant a licence to any other person to import or
export any of these goods.
B. All the state trading enterprises granted special privileges in respect of goods, the import or
export of which is governed through the provisions of the above policy shall make any such purchases
or sales involving imports or exports solely in accordance with commercial considerations including
price, quality, availability, marketability, transportation and other conditions of purchase or sale.
These enterprise(s) shall act in a non-discriminatory manner and shall afford the enterprises of othercountries adequate opportunity in accordance with customary business practice to compete for
participation in such purchases or sales.
EXPORT
C. In the case of onion, Niger seeds and other forest produce, there is no quantitative ceiling for
exports and market forces determine export quantities of these items.  Export prices are determined on
commercial considerations and by the demand and supply forces in the international market.  In the
case of onions, Minimum Export Price (MEP) is determ ined for different varie ties keeping in view theG/STR/N/7/IND
Page 5
national and international market intelligence, crop prospects, market trends, quality aspects, freight
charges, etc.  Onion is a domestically sensitive product, it has to be ensured that adequate quantities of
domestic varieties are available for the domestic market.  The objective of granting exclusive
exporting right for minor forest produce is to provide marketing assistance to poor tribes and to
obviate/alleviate the possible exploitation of the poor indigenous tribes by middlemen.  The details ofthe STE’s granted exclusive exporting right for onions and forest produce are:
(a) National Cooperative Consumers’ Federation of India Ltd .:  The National
Cooperative Consumers Federation of India is  the apex body of Consumer Cooperative
Societies in India, registered under the Multi-State Cooperative Societies Act 1984.  It
provides managerial assistance to improve the functioning of consumer cooperatives in India.
It also helps distribute general use consumer goods at competitive prices.
(b) National Agricultural Cooperative Ma rketing Federation of India Ltd:  National
Agricultural Cooperative Marketing Federation of India Ltd also known as NAFED was set
up in 1958 with the objective to organize, promote and develop marketing, processing and
storage of agricultural, horticultural and forest produce.  It undertakes inter-state, intra-stateand export/import trade to help farmers get remunerative prices for their produce, stabilize
prices and maximize both producers and consumers value.
(c) Karnataka State Agricultural Produce Processing and Export Corporation Ltd.:
Karnataka State Agricultural Produce Processing  and Export Corporation Ltd., is a Bangalore
based company incorporated under the provisions of the Companies Act, 1956.  Created in
1996 the main purpose is to develop, and promote the production, processing and export of
agriculture, horticulture and floriculture products from the Karnataka State.
(d) Gujarat Agro Industries Corporation Ltd.:  Gujarat Agro Industries Corporation
Ltd. based in Ahmedabad, Gujarat State, is a Company incorporated under the Companies
Act, 1956.  The main objectives is to finance and promote industries based on agriculture, to
manufacture and or market export quality agricultural inputs and market intervention on
behalf of the State government in cases of crises to protect small and marginal farmers.
(e) Madhya Pradesh State Cooperative Oilseed Grower’s Federation Ltd.:  M.P.
State Cooperative Oilseed Grower’s Federation Ltd., (OILFED) is a body registered under theMadhya Pradesh State Cooperative Societies Act, 1960.  It is the implementing agency of the
Government of India’s oilseed development pr ogramme in the state of Madhya Pradesh.  It
has been granted the right to export Niger seeds, Niger seed is an oleaginous minor forest
produce, collected for the sake of livelihood by the indigenous people/tribes of India.
(f) Tribal Cooperative Marketing Develo pment Federation of India Ltd:  Tribal
Cooperative Marketing Development Federation of India Limited (TRIFED) is an apex level
Cooperative Federation set up in 1987 to provide fair economic returns to tribals for their
produce.  It takes up activities like training of tribal growers for scientific cultivation and
collection methods to add value to their produce.  It has been granted the right to export Nigerseeds and Gum Karaya.
(g) National Dairy Development Board:  The present National Dairy Development
Board (NDDB) was created under an Act of Parliament the NDDB Act, 1987 by the merger
of the Board, then registered as a society, and the Indian Dairy Corporation, a Companyformed and registered under the Companies Act 1956.  The resulting corporate body bears the
old name: National Dairy Development Board.  The Act has declared the Board to be an
institution of national importance.  The main  contribution of NDDB has been the initiation
and fostering of the process of modernisation of India's dairy industry.  The cooperativeG/STR/N/7/IND
Page 6
movement NDDB helped to create has become a model for other developing countries and
the international agencies that are concerned with dairy development.  The NDDB helps
export Niger seeds from the western region of India.
(h) Andhra Pradesh State Co-operative Marketing Federation Ltd (AP
MARKFED) :  A.P. Markfed was established in the year 1957 with Headquarters at
Hyderabad.  It is a federation of Marketing Co-operative Societies in Andhra Pradesh with the
main objective of helping the farmers to secure better price for their produce by taking care of
their marketing needs and providing agricultural inputs.  Against this objective the Markfed's
present activity consists of sale of farm inputs like chemical fertilizers, pesticides & seeds,
maintenance of godowns & procurement of Agricultural commodities through its member
societies.
(i) Maharashtra State Agricultural Marketing Board :  Maharashtra State
Agricultural Marketing Board is a statutory authority responsible for the development of
agricultural marketing in the State of Maharashtra.   This body has been granted the right to
export Onions (all varieties other than Bangalore Rose Onion & Krishnapuram Onions) asand when there is adequate surplus domestic production of Onion.
(j) Andhra Pradesh State Trading Corporation :  APSTC is an Andhra Pradesh
government undertaking set up in 1970 to execute all kinds of financial and trading
operations.  It undertakes domestic marketing in selective goods and commodities.  It isengaged in import of goods and commodities for government departments and undertakings.
It is also promoting exports from the state of Andhra Pradesh.
(j) Spices Trading Corporation Ltd .:  Spices Trading Corporation Ltd. was set up in
1982 as the Cardamon Trading Company Limited, a company incorporated under theCompanies Act.  Its main objectives are to carry on domestic and international trade in spices
and their products; to process and preserve spices and manufacture their products; to support,
project, maintain, increase and promote the production of their products as also their sale and
export; to undertake and promote research and development of spices and their products; to
promote and develop new markets for spices and their products; to carry on business as
dealers and exporters of agricultural commodities and products thereof; and to conduct open
auctions and sell spices regularly at all important centres in India as well as in other countries.
D. For certain minerals and ores exclusive exporting rights are granted to the enterprise
concerned, export prices in all these cases are determined on commercial considerations and by the
demand and supply forces in the international market.  In the case of iron ore, prices may be fixed on
a yearly basis as the exports take place under long-term/annual contracts.  In the case of mineral andore products, the quantities available for export are liable to be restricted from time to time keeping in
view the domestic requirement as well as the need to conserve exhaustible natural resources.
(l) Kudremukh Iron Ore  Company Ltd:  Kudrem ukh Iron Ore Company Ltd.,
Bangalore is a Public Limited Company.  This company has been granted the right to exportIron Ore Concentrate, produced by itself, prepar ed by beneficiation and/or concentration of
low grade iron ore containing 40 per cent or le ss of iron and the right to export Iron Ore
pellets manufactured by the company out of concentrates produced by itself.  The ore
available at the mines cannot be put to use commercially without beneficiation, and technical
and logistical constraints make it unviable to put to use the production of the beneficiated oredomestically.
(m) Manganese Ore (India) Ltd :  Manganese Ore (India) Limited was established in
1962, and is the largest producer of Manganese Ore in India. Government of India holdsG/STR/N/7/IND
Page 7
81.57 per cent shares in MOIL with State Governments of Maharashtra and Madhya Pradesh,
holding 9.62 per cent and 8.81 per cent shares respectively. MOIL produces and sells
different grades of Manganese Ore.  It has be granted the exclusive right to export manganese
ores below 46 per cent Mn.  All commercial transactions are carried out on commercial terms
by the enterprise.
(n) Indian Rare Earths Ltd:  Indian Rare Earths Ltd is a company incorporated under
the Companies Act, 1956.  This enterprise has been granted the right to export rare earths
(including Yttrium) ores, concentrates and compounds thereof; other minerals containing the
following substances as accessory ingredients including (a) Samerskite and (b)Uraniferrous
allanite, Radium ores and concentrates;  and Granular sillimanite produced by Indian Rare
Earths Limited, and Kerala Minerals and Metals Ltd. These rights have been granted keepingin view the nature of these substances, which could also have dual use, and in the interests of
safety and national security.
(o) Kerala Minerals Metals Ltd:  Kerala Minerals Metals Ltd is company Kerala
Government Company incorporated in 1974 for exploiting the rare earths found in Kerala.This enterprise has been granted the right to export other minerals containing the following
substances as accessory ingredients including (a) Samerskite and (b)Uraniferrous allanite
Radium ores and concentrates;  and Granular sillimanite produced by Indian Rare Earths
Limited.
(p) Minerals and Metals Trading Corporation:  MMTC was established in 1963 as a
Company incorporated under the Indian Companies act, 1956.  MMTC is today India's
leading international trading company, with a turnover of over US$1billion.  MMTC is major
global player in the minerals trade and is the single largest exporter of minerals from India.
With its comprehensive infrastructural expertise to handle minerals, the company providesfull logistic support from procurement, quality control to guaranteed timely deliveries of
minerals from different ports, through a wide network of regional and port offices in India.
Its earlier monopoly on mineral trading has been substantially reduced and at present has been
granted the right to export specified varieties only of iron ore; manganese ore, chrome ore
lumps and mica scrap as and when there is surplus of these raw materials.
IMPORT
E. The state trading enterprises domestically procure/purchase and import depending on the
supply situation as well as prices.  For agricultural products since the main purpose of maintenance of
state trading is both – a fair return to the farmer s as well food security i.e. availability of adequate
food for all sections of the society at prices affordable by them, domestic and international prices aswell as supply conditions are the main determinants of quantities of imports.  Regarding fertilizers,
India maintains a system of subsidisation of both imported as well as domestic fertilizers at a
differential margin, the state trading enterprise imports or procures domestically keeping in view the
international prices, the domestic demand and the necessity of assured supply to farmers.  Regarding
petroleum products India being petroleum deficient, imports a major portion of its requirements, withthe state trading enterprises following the normal commercial practices.
(q) Minerals and Metals Trading Corporation:  MMTC, details provided above, also
has been granted exclusive importing right to import Ammonium Sulpho Nitrate and Urea.
(r) Indian Potash Limited:  Indian Potash Ltd. was established in 1955 as the Indian
Potash Supply Agency for handling the distribution and promotion of potassic fertilizers in
India.  Its main objective continues to be marketing and sales promotion of potash, import of
which is no longer controlled.  IPL has a special importing right for import of urea.G/STR/N/7/IND
Page 8
(s) Food Corporation of India :  The Food Corporation of India was setup under the
Food Corporations Act 1964, in order to fulfill the objectives of the Food policy viz. effective
price support operations for safeguarding the interests of the farmers; distribution of food
grains throughout the country for Public Distribution System; and Maintaining satisfactorylevel of operational and buffer stocks of food grains to ensure National Food Security.  FCI
has been granted the right to import cereals like wheat, rye, oats, maize, rice, grain sorghum,
buckwheat, millet, canary seed, jawar, bajra, ragi and other cereals.
(t) State Trading Corporation of India Ltd.:  The State Trading Corporation of India
Ltd. (STC) is one of the premier international trading organizations of the country.  Set up in
1956, STC plays an important role in India's foreign trade - both exports and imports.  Beinga specialized trading enteprise STC has been granted the right to import copra, crude oil
(Coconut oil and its fractions) and Urea.
(u) Indian Oil Corporation :  Incorporated in 1959, became a Corporation in 1964.  This
company has been granted the right to import all types of Motor spirit (Gasoline), all types of
aviation spirit, all types of spirit type (gas oline type) jet fuel, Kerosene type jet fuels
(Aviation turbine fuel), Diesel gas oil, Other gas oil, Kerosene, Crude Oil and Liquefied
Petroleum Gas.  It has also been granted the right to export Kerosene Crude Oil and Liquefied
Petroleum Gas.
(v) Hindustan Vegetable Oil Corporation:   While this body has been granted the right
to import Copra, Crude Oil  (Coconut oil and its fractions) and other, it is presently being
restructured, a decision regarding its future business activities will be taken shortly.
4. Statistical information
The imports and exports of items for which special privileges have been granted to designated
state trading enterprises in the last three years are enclosed in Annexes 1 and 2, respectively.
5. Reason why no foreign trade has taken place (if this is the case) in products affected
Trade has taken in place in all cases.  For some coarse food grains the quantum of trade is
very low due to low domestic prices.
6. Additional information
NILG/STR/N/7/IND
Page 9ANNEX 1
Imports of Items under State Trading during 1998-2001
Value:  Rs. Crores Quantity:  000 tonnes
S1.Name of item1998-1999 1999-2000 2000-2001*
No. Qty. Value Qty. Value Qty. Value
1. Petroleum Oils, other than
crude (2710)19011 11981.80 13091 1119.02 4218 5403.95
2. Urea 13 3.95 704 290.04 99 59.00
3. Cereals
a. Wheat (1001) 1804 1164.98 1367 775.16 4 2.87
b. Rice (1006) 6 5.41 32 29.95 13 17.79
c.. Oats (1004) - - Neg. (381 tons) 0.23 1. 0.68
d. Rye (1002) - - - - - -
e. Maize 1 0.84 177 100.04 29 14.70
f . S o r g h u m ------
g. Millets Neg. 0.14 Neg. 0.12 Neg. 0.09
4. Ammonium Sulphonitrate Neg. Neg. Neg. 0.03 - -
Note:  *Data up to January 2001G/STR/N/7/IND
Page 10ANNEX 2
Exports of Items under State Trading during 1998-2001
Value:  Rs. Crores Quantity:  000 tonnes
S1. Name of item 1998-1999 1999-2000 2000-2001*
No. Qty. Value Qty. Value Qty. Value
1. Petroleum products (2709, 2710) 0.75 376.22 295 168.45 NA 8309.97
2. Gum karaya (1301) 1 11.67 1 9.42 1 11.69
3. Rare earths products (2617, 2618,
2619)Neg. Neg. 38 35.34 35 26.42
4. Iron ore ((2601) 22274 1615.50 15716 1175.32 20895 1629.34
5. Manganese ore (2602) 167 18.98 52 15.18 256 55.96
6. Niger seeds (120799.05) 18 43.56 16 45.51 29 80.35
7. Onions (0703) 220 180.20 221 184.00 265 211.41
8. Chrome Ore lumps (2610) 493 176.43 606 136.69 519 137.37
9. Mica Scrap (2525) 48 43.33 44 40.13 31 30.87
Note:  *Data up to January 2001
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