WORLD TRADE
ORGANIZATIONG/SCM/Q2/IND/13
1 November 2002
(02-6046)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
Replies to Questions from the UNITED STATES1 Regarding
The New and Full Notification of INDIA2
The following communication, dated 31 October 2002, has been received from the Permanent
Mission of India.
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India - Fertilizer Subsidy Programmes
The following questions are pursuant to Article XVI:1 of the GATT 1994 and
Article 25.8 of the Agreement on Subsidies and Countervailing Measures.
Q1. Would you please provide information concerning India’s provision of subsidies (such
as the Retention Price and Subsidy Scheme) with respect to the production, importation, sale
and/or distribution of Diammonium Phosphate (DAP) fertilizer?  Specifically, please provide
information on the following:
(a) Background, authority, form of subsidies, and policy objective or purpose,
including a copy of the statutory authority and implementing regulations;
Reply
Small and marginal farmers who are low-in come or resource-poor hold an overwhelming
proportion of agricultural land in India.  As a result, they do not use N.P.K. fertilizers in a balancedmanner.  Various measures of assistance to encourage agricultural and rural development have been
undertaken in India including making complex fertilizers generally available to Indian farmers at
uniform and affordable prices throughout the country.
There is no "Retention Price and Subsidy Scheme" for Diammonium Phosphate ("DAP")
fertilizers.  However, the Government of India has instituted a Scheme of Concession for DAP and
other complex fertilizers under which the Government fixes a Maximum Retail Price at which  DAP
may be sold to farmers across India.  The primary consideration in fixing the Maximum Retail Price is
affordability to farmers.  The Government also fixes the price that the domestic producer is entitled to
recover for DAP that primarily takes into account changes in variable costs on account of feedstock,etc.  There is also an arrangement to extend a concession on imported DAP to ensure its availability to
farmers at the Maximum Retail Price.
                                                     
1 G/SCM/Q2/IND/12
2 G/SCM/N/71/INDG/SCM/Q2/IND/13
Page 2
The central objective of the Scheme of Concession is to ensure that low-income and resource-
poor Indian farmers can obtain DAP and other complex fertilizers at affordable prices.
(b) Procedures for determining the subs idy payments for both domestically-
produced DAP and imported DAP and the actual subsidy payments made for
both categories in each of the past three years;
Reply
The Maximum Retail Price under the Scheme of Concession for DAP and complex fertilizers
is generally announced by the Ministry of Finance in the Annual Budget after consultation withMinistries/Organizations.
The details of actual payment made under the Scheme of Concession for DAP are not readily
available and we are in the process of collecting the information.
(c) 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;
Reply
The difference, if any, between the payments to domestically produced DAP and imported
DAP is attributable to the reasons contained in the reply to question 1(a) above.
(d) The subsidy payments per unit for both domestically-produced DAP and
imported DAP and the annual amount budgeted for both the subsidy for
domestically-produced DAP and the subsidy for imported DAP;
Reply
The Scheme of Concession does not provide for unit-wise or importer-wise payments.  The
annual amounts paid under the concessions scheme for DAP for domestically-produced DAP and forimported DAP are set forth in the reply to question 1(b) above.
(e) Duration of the subsidy programme, and;
Reply
The determination of the duration of the Scheme of Concession for DAP fertilizers is made on
a yearly basis at the time of the presentation of the annual budget to Parliament.
(f) Statistical data permitting an assessment of the trade effects of the subsidy
programme, including Indian import levels of DAP during each of the past three
years.
Reply
Statistical data permitting an assessment of the trade effects of the Scheme of Concession are
not available.  With respect to Indian import levels of  DAP for past years, the United States may refer
to India's submissions for purposes of the Integrated Data Base (IDB).G/SCM/Q2/IND/13
Page 3
Q2.  In addition, please provide information concerning the recipient of benefits under this
programme with respect to the production, importation, sale or distribution of DAP.
Reply
The primary target of benefits under the Scheme of Concession for DAP is the low-income
and resource-poor farmers in order to ensure that they can obtain DAP at a uniform and affordable
price.
Q3. Finally, please indicate whether this programme was included as “Fertilizer subsidy” in
your “notification concerning domestic support commitments for marketing year 1995-96"
(G/AG/N/IND/1, dated 17 June 1998) .  If so, please explain why.
Reply
Attention of the United States is drawn to India's Notification to the Committee on
Agriculture (G/AG/N/IND/ 1) wherein in Supporting Table DS:9, showing the estimation of generally
available input subsidies, no account has been taken of the exemption of input subsidies to low-
income and resource-poor farmers in developing countries in terms of Article 6.2 of the Agreement on
Agriculture.
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