WORLD TRADE
ORGANIZATIONWT/TPR/M/100
1 August 2002
(02-4254)
Trade Policy Review Body
19 and 21 June 2002
TRADE POLICY REVIEW
INDIA
Minutes of Meeting
Chairperson:  H.E. Ms. Amina Chawahir Mohamed (Kenya)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3
II. OPENING STATEMENT BY THE REPRESENTATIVE OF INDIA 4
III. STATEMENT BY THE DISCUSSANT 9
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 12V. REPLIES BY THE REPRESENTATIVE OF INDIA AND ADDITIONAL COMMENTS 27VI. CONCLUDING REMARKS BY THE CHAIRPERSON 35WT/TPR/M/100
Page 3
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The third Trade Policy Review of India was held on 19 and 21 June 2002.  The Chairperson
(H.E. Ms. Amina Chawahir Mohamed) welcomed the delegation of India, headed by
Mr. Dipak Chatterjee, Secretary of Commerce, and the discussant H.E. Mrs. Mary Whelan (Ireland).
As usual, the discussant would speak in her personal capacity and, in accordance with established
procedures, had made available in advance a broad outline of the themes she intended to raise
(document WT/TPR/D/79).
2. The Chairperson recalled the purpose of the Trade Policy Reviews and the main elements of
the procedures of the meeting.  The Report by the Government of India was contained in document
WT/TPR/G/100 and that of the Secretariat in docum ent WT/TPR/S/100.  Copies of advance written
questions, submitted by:  Switzerland;  Canada;  Japan;  New Zealand;  Korea;  Hong Kong, China;
Bangladesh;  the European Union;  Colombia;  Brazil;  Uruguay;  the United States;  Malaysia;Norway;  and Thailand, had been transmitted to the delegation of India.  These questions and the
replies provided by the delegation of India are reproduced in WT/TPR/M/100/Add.1.
3. As pointed out in the Government and the Secretariat Reports, she noted the strong real GDP
growth in India over the past decade, averaging 6% annually, and its resilience in facing external
shocks since its last Trade Policy Review (TPR) in 1998.  This growth was due, in part, to continued
structural reforms, including trade liberalization, which had fostered competition, raised efficiency,
and had contributed greatly to alleviating poverty and reducing infant mortality.  To achieve further
significant cuts in poverty, the Government was currently targeting growth of between 7% and 9%,
substantially higher than the rate of 5.4% expected in 2001/02.  She noted that Members would be
interested in learning more about how India hoped to accomplish this ambitious goal.
4. She noted, from the Government Report, India's commitment to deepening its reforms.  India
realized that international trade played a vital pa rt role in economic development, and could be an
effective instrument for raising growth, creating jobs, and alleviating poverty.  There was also an
expectation, however, that India's trading part ners in the WTO would take steps to remove
impediments to its exports.
5. Before giving the floor to the Indian delegation, the Chairperson informed Members that
Mr. C. Boonekamp would take the floor to up-da te Members on the Trade Policy Review Body
(TPRB) programme for the rest of the year, and the first part of 2003.  She also recalled that, at the
end of the TPR of India, the TPRB would hold an informal session to discuss its Rules of Procedure,
in particular derestriction of TPRB documents.WT/TPR/M/100
Page 4
II. OPENING STATEMENT BY THE REPRESENTATIVE OF INDIA
6. The representative of India stated that the Secreatariat Report was comprehensive although
India might not agree with every aspect of the analysis.  It was a testimony to the openness of India's
system.  A large part of the material relied upon in the Report was from the various official websites
of the departments of the Government of India, or from other published reports.  Internally, India was
a vibrant democratic nation, quite unsparing in the criticism of its own trade and economic policies.
7. In the last four years, India had maintained an average annual growth rate of about 6%, which
made it one of the more rapidly growing major economies.  Export performance had, however, been
mixed.  In 1998/99 exports declined by 5%, whereas in 2000/01 they increased by over 20%.  Exports
remained more or less stagnant in 2001/02 primarily due to the global economic slowdown,
exacerbated by the events of 11 September 2001.  Import growth had also shown a varying pattern,
although always remaining positive, and had exceeded 17% in 1999/00.  The macroeconomicfundamentals of India remained strong with 51 mill ion tons of food stocks, foreign exchange reserves
of US$55 billion, equivalent to ten months import re quirements, an interest rate regime that had
progressively become softer over the past four year s, and a low rate of inflation of 1.4%.  Concerns
persisted, however, about the level of Government fiscal deficit.  India was optimistic that, through
comprehensive reforms in core sectors, including agriculture, the coming years would witness highergrowth.
8. The representative noted that it was important to see economic progress also through the
prism of social development.  The incidence of poverty, as a percentage of people living below the
poverty line had declined from 36% to 26%, while overall employment had grown by about 1% per
annum between 1993/94 and 1999/00.  The literacy rate had increased from 52.21% in 1991 to
65.38% in 2001, and free and compulsory education for children aged 6-14 years had now been made
a fundamental right.  The average annual growth rate of the population had declined to 1.93% from2.14% in 1991.
9. Since India's last TPR, in 1998, the world economy had been jolted by several external
shocks, such as the East Asian crisis, high oil prices during 2000-01, and the recent global economic
downturn.  Domestically, India had had to endure the devastation wrought by natural calamities, such
as the Orissa cyclone and the Gujarat earthquake.  Despite these internal and external impediments,India had been able to maintain reasonably high gr owth.  This showed the resilience of the Indian
economy.  India's deep commitment to the ongoing economic programme of reforms had provided an
added motivation.
10. Since 1998, a number of economic reform measures had been introduced, in various areas
(paragraphs 13 to 42 of the Government Report), to achieve greater integration into the worldeconomy.  These included the removal of quantitative restrictions;  removal of dividend balancing
requirements;  lowering of customs duties;  a very liberal foreign direct investment regime;  and
deregulation of important sectors, such as banking, insurance, and telecom.  These initiatives had been
complemented by domestic reforms in key areas, such as the removal of the administered price
mechanism in the petroleum sector from 1 April 2002;  introduction of a central excise duty at asingle rate of 16%;  widening of the tax base;  agricultural diversification;  rationalization of user
charges for various services;  monetary policy reforms, including a reduction in interest rates;  greater
momentum towards privatization of public sector units;  progressive removal of reservation for
small-scale industrial units;  improvement and modernization of infrastructure;  introduction of laws
for better corporate governance;  and efforts to reduce the fiscal deficit.
11. The complexities involved in reforming a vast  federal country, like India, could perhaps be
illustrated by its attempt to introduce a country-wide value added tax (VAT).  Consultations with theWT/TPR/M/100
Page 5
state governments had been started as long ago as 1994.  These could, however, come to fruition only
in November 1999, when all the Chief Ministers of St ates and Union Territories decided to implement
a uniform floor rate of sales tax, and to phase out sales-tax-based incentives by 1 January 2001.  It
was now expected that the VAT regime would be implemented from 1 April 2003.  The interim
period was to be used for preparation, training, computerization, publicity, and initiating steps to
amend the relevant laws.
12. Thus, the reforms undertaken had been carried out through a process of consultation and
consensus, taking into account the varied needs of the different segments of the population, and within
the framework of India's democratic and federal structure.  India wanted the changes to be sequenced
carefully and their implementation to be closely monitored so that they had positive support from all
sections of society.
13. India was moving towards implementing a host of second-generation reforms.  Its broad
strategy was to:  (i) continue to put emphasis on agriculture and food-economy reforms;  (ii) enhance
public and private investment in infrastructure;  (iii) strengthen the financial sector and capital
markets;  (iv) deepen structural reforms and regenerate industrial growth;  (v) provide social security
to the poor;  (vi) consolidate tax reforms and to continue Central and State fiscal adjustment.
14. Agriculture had a special place in India's economy as it accounted for 25% of GDP, and
employed nearly 70% of the workforce.  It was a significant export earner, supplied the bulk of basic
food requirements, and provided subsistence and incomes for large rural populations.  India had taken
various initiatives, such as progressive dismantling of restrictions on the domestic movement and
export of agricultural commodities;  improvement of rural infrastructure;  promotion of private sector
participation in agriculture;  and creation of Agricultural Export Zones.  The sugar and fertilizer
sectors were being decontrolled in a phased manner.  However, trade policy had to be tailored to
safeguard the food and livelihood security of the population, and to actively promote ruraldevelopment.
15. In other areas of trade policy, substantial liberalization had taken place in recent years.  All
quantitative restrictions maintained for balance of payments (BOP) reasons had been removed from
April 2001.  Customs duty rates had been reduced progressively, with peak rates now reduced to 30%
and the goal, as announced by India's Finance Minister in the last Budget Speech, was to bring intwo basic rates of 20% and 10% by 2004-05 for non-agricultural products.
16. The new Export-Import Policy framed for the period 2002-07, and announced on 31 March
2002, sought to usher in an environment free of restrictions and controls.  The focus was on trade
facilitation and export promotion, through greater automation in procedures, and steps such as the
removal of all QRs on exports except on a few sensitive items, special focus on the cottage sector andhandicrafts, extension of facilities to industrial cluster towns with high export performance, and
assistance to states for infrastructural development for exports.
17. The Medium Term Export Strategy for 2002-07 provided a vision for creating a stable policy
environment with indicative sector-wise strategies.  An important element of this strategy was to
achieve overall lower average tariffs, which would benefit exports, through cheaper cost of inputs.The Strategy aimed for India to achieve:  1% of global trade by 2007 from the present share of  0.7 %.
This would require a doubling of the value of merchandise trade over the 10th Five Year Plan
covering the period 2002-07.
18. The reform programme would also need to respond to the legitimate needs and concerns of
domestic industry, the support of which was crucial for bringing about sustained economic growth.India had unfortunately been facing the problem of dumping of goods by foreign exporters at a timeWT/TPR/M/100
Page 6
when its industry was vulnerable, and trying to adjust to a new quantitative-restrictions (QRs)-free
environment.  However, the initiation and conduct of anti-dumping investigations in India was fully inaccordance with the procedure required under the WTO Agreement on Anti-Dumping (ADA), and
under the GATT 1994.  The investigations conducted by the designated authority were open to a
rigorous process of appellate and judicial review.  All India's actions were notified to the WTO in a
timely manner, adding to the transparency of its domestic exercise.
19. Several product standards had been notified recently under the Foreign Trade Development
and Regulation Act, which would apply to imported goods.  The representative clarified that the
Export-Import Policy had always prescribed that all imported goods be subject to domestic laws,
rules, orders, regulations, technical specifications , environmental and safety norms as applicable to
domestically produced goods.  Thus, all regulations applicable to the domestic industry would apply
to imported products as well.  However, due to the presence of QRs, no significant imports of theseproducts had taken place.  As such, there was no need to highlight these provisions as they also
related to imported products.  In the interest of greater transparency and predictability, after the
removal of QRs, these regulations, already applicable to domestic products, and legally applicable to
imported products, had been notified under the Foreign Trade Development and Regulation Act in a
consolidated manner.  As a result, they had come to the notice of the public as well as of the borderenforcement authorities.  For example, the Standards of Weights and Measures Act had been
applicable since 1976, and had not been revised afte r the removal of QRs.  A notification issued under
the Foreign Trade Development and Regulation Act now drew attention to this provision.  This was
also the case with other Acts, such as the Prev ention of Food Adulteration Act, the Motor Vehicles
Act, and the Meat and Food Product Order.
20. India was an original Member both of the GA TT and of the WTO.  India had taken its
commitments to the WTO seriously, and made every effort to implement them domestically.  Mostrecently, the Second Amendment Bill of 1999 had been passed by the Parliament to amend the Patent
Act, 1970.  The amendments to the Patent Act not only honoured India's international obligations
under the relevant provisions of the TRIPS Agreement, the Paris Convention, and other Conventions,
but also charted a path for reasearch and development-driven economic development.
21. State-owned or public sector enterprises (PSEs) had historically played an important role in
India's economic development.  However, due to the scarcity of capital resources, the inefficient and
loss-making operations of the existing PSEs, the increased competition resulting from liberalization of
the economy, and the drain on public resources to fund public sector losses, a consensus had emerged
that the Government should not be operating commercial enterprises.  It was the Government's stated
policy to reduce equity in all non-strategic PSEs to 26% or lower, if necessary.  While progress onthis had not been as rapid as India had wished, th e pace had gathered momentum in recent months as
indicated in both the Secretariat and the Government Reports.  Between March and May 2002,
three more large PSEs had been put through this process, which would fetch the Government a total
of Rs. 43.59 billion.
22. India's foreign direct investment (FDI) policy had undergone significant liberalization since
its last Review.  Procedures had been simplified, including by placing most of the activities on the
automatic route, under which the foreign investor had only to notify the Reserve Bank of India
regarding the investment made.  FDI was permitted up to 100% in most sectors.  Many new sectors,
such as integrated townships, the mass rapid transit system, and the defence industry, had been
opened up to FDI.  Dividend balancing conditions for 22 specified consumer items and local-content-requirements for the auto sector had been withdrawn.  A new auto policy had been announced which,
inter alia, provided automatic approval for foreign equity investment up to 100% for the manufacture
of automobiles and components.  During the financial year 2001/02, FDI inflows amounted toWT/TPR/M/100
Page 7
US$4.06  billion (exclusive of IADR/GDRs), a grow th rate of 65% over the previous year
(US$2.46 billion).
23. India had made significant strides in opening up its telecom sector to private participation and
competition.  This had been well highlighted in both the Government and the Secretariat Reports.
International telephony had been opened up to private participation with effect from 1 April 2002,
even ahead of India's commitments under the GATS.  The Telecom Regulatory Authority of India had
rationalized and reduced tariffs over the last few years, and had also substantially reduced thecross-subsidy element.  There had also been a significant improvement in teledensity.  This sector had
also been one of the largest recipients of FDI in recent years.  A new comprehensive statute, called the
Communication Convergence Bill, was presently under consideration of Parliament;  when passed it
would replace the Indian Telegraph Act of 1885.
24. Despite many constraints, India had undertaken to implement all its WTO commitments
faithfully.  Likewise, India expected its concerns to be addressed meaningfully.  Some of these had
been indicated in the Government Report, i.e., satisfactory resolution of  implementation-related
issues and of the Special and Differential Treatment issues.  The Doha Declaration had given high
priority to the resolution of these issues;  developing countries had also submitted proposals on
several of them.  India looked forward to their m eaningful resolution strictly in accordance with the
deadlines spelt out in the Doha Ministerial Declaration.
25. India was also keen to see the elimination of all barriers impeding market access for its
products;  examples of those barriers had been provided in the Government Report.  India appreciated
that its products should meet international standards, and had made considerable progress by
harmonizing Indian standards with international standards.  However, India felt outnumbered in the
deliberations of various international bodies, such as the International Standards Organization (ISO)
and the Codex Alimentarius, which resulted in th e adoption of standards that developing countries
could not implement.  India hoped, therefore, that efforts made by the DG and the WTO would
enhance participation by developing countries in the work of the international standard-setting bodies.
26. India's problems concerning market access for textile products were well known, and needed
no repetition.  India stressed that this was an important sector for developing countries, and that
further opening up would help them to increase thei r share in world trade.  India looked forward to
improved market access for its agricultural products in the on-going negotiations under the Agreement
on Agriculture through the reduction of high tariffs and subsidies prevalent in the developed
countries.
27. The increasing proliferation of regional trading arrangements (RTAs) had impacted on India's
trade as some of those agreements had resulted in trade diversion.  Items of export interest to India,especially textiles, were increasingly channeled through RTAs, thereby reducing India's market
access.
28. India hoped to see forward movement in mode 4 of the GATS in the negotiations on services.
It was an important mode for India and for most developing countries.  India hoped that the
liberalization of trade in services would take place in sectors and modes of export interest todeveloping countries, while maintaining the present GATS architecture.  This would be absolutely
essential for obtaining a balanced result from the ongoing negotiations.
29. For India to reach its goal of a 1% share of world trade by the year 2007 and the growth rate
targeted in its Approach Paper to the 10th Five Year Plan, India's efforts would need to be
complemented by action from its WTO trading partners to meet its legitimate concerns andaspirations.  In this regard, India looked forward to increased market access in the developedWT/TPR/M/100
Page 8
countries, a bridging of the gap between preferential and non-preferential tariffs, harmonization of
rules of origin, and reduction of non-tariff barriers.
30. In conclusion, the representative emphasized that India aimed to continue its reforms, but
with a human face.  In India's view, this was the only way to ensure that the reform programme was
sustainable over the long term, and that it would continue to enjoy the support of the widest spectrum
of the Indian society and polity.  While India reiterated its strong commitment to the multilateral
trading system, to ensure the success of the WTO, it would need the continued support of WTOMembers, in encouraging its efforts and in addressing its concerns.  This also required an appreciation
that different countries were at different stages of development and of resource generation and,
therefore, changes in the WTO order would need to be calibrated to accommodate the development
needs of all countries.WT/TPR/M/100
Page 9
III. STATEMENT BY THE DISCUSSANT
31. The discussant (H.E. Mrs. Mary Whelan) welcomed the opportunity to address the TPRB on
India's Trade Policy Review, not least because of its very active role within the WTO.
32. As outlined in both the Secretariat and Government Reports, she noted India's strong
economic performance over the past decade, and its commitment to continued liberalization and
opening up its economy.  Ambitious growth targets, and a wide-ranging legislative programme of
reform had been established.  In recent months, the privatization programme had received a boostwith a number of announcements, such as the takeover of Maruti by Suzuki Motors.  As the period
under review had witnessed strong economic growth, there had been parallel developments in social
policy, including reductions in the percentage of people living below the poverty line;  improvements
in infant mortality rates;  an increase in literacy rates;  and a modest increase in employment.
Engagement in international trade had played, and would continue to play, a key role in India's
transformation.  The goals set by the Administration were challenging:  GDP growth of  8% in
2002-07;  an increase in India's share of world trade from its present level of 0.67% to 1% by 2007
(this would require a 11.9% annual increase in exports), and a target of FDI flows of US$10 billion
annually over the next three, four years.
33. In its Report, the Government had indicated that it would continue to adopt a consensual
approach to restructuring India's economy, as reforms had a better chance  of success when they had
popular support.  In meeting its targets, India would confront and address difficult issues.  Amongst
those outlined in the Secretariat Report were infrastructural bottlenecks with particular difficulties in
banking and power.  The Report also noted:  (i) that electricity reform could add 1-2% to GDP almost
instantly;  (ii) India's narrow tax base, with exci se and customs duties providing a major share of tax
revenue;  (iii) India's high interest rates, partly due to Government borrowing to finance the deficit;
(iv) high fiscal deficits at both central government and state levels linked to debt repayments, highinterest rates, and public subsidies, and inadequate user charges for many utilities;  and (vi) the need
to further stimulate investment, including FDI.  A ll of these issues were interlinked.  The effects of
regional tensions on the economy could be added to the list.
34. Given these challenges, she asked:  (i) how India intended to raise direct tax revenue to 10%
of GDP (from 3.4% in 2000-01);  (ii) how India intende d to meet its goal of further reducing custom
duties in the light of the fiscal deficit, and the major share of excise and customs duties in India's tax
revenue, and given that tax reform had been difficult, with the move to a VAT being deferred twice to
2003;  (iii) the reasons for low FDI at around 1% of GDP, despite recent successes in liberalizing
India's investment regime;  (iv) how India expected to achieve its growth targets;  (v) what sectors of
the economy were expected to yield the highest growth rates;  (vi) to what extent interest rates werebeing pushed up because of the high level of non-performing assets (NPAs) in the banking sector, and
requirements, such as "priority sector lending";  and (vii) given the urgent need for reform in the
power sector, how India planned to address the high losses in the State Electricity Boards, which the
Secretariat Report had noted were due to theft, lack of metering of electricity use, non-collection of
revenue, overstaffing, and ineffective management.
(i) Trade policy
35. The Secretariat Report had noted that, since 1998 all import restrictions  maintained by India
for balance-of-payments reasons had been removed;  the remaining restrictions included second-hand
motor vehicles that could be imported only throug h the port of Mumbai.  It appeared that more
stringent standards were applied to imported, used, three-year-old cars than to domestic cars of thesame age.  She asked whether there were proposals to address this anomaly.WT/TPR/M/100
Page 10
36. While there had been efforts to rationalize India's tariff structure, the Secreatariat Report
referred to it as "complex" and "opaque".  Tariffs remained relatively high with significant escalationin some sectors, notably textiles and leather, food, beverages, wood, furniture, and tobacco.  The
average bound tariff (50.6% in 2005) was considerably higher than the current MFN average tariff,
which lent uncertainty to economic agents in India.  She asked whether there were proposals to
address this uncertainty.  In relation to rectifications and modifications of India's Schedule, she asked
about the status of the new bindings, and whether the document had been certified.  She noted thatIndia had increasingly resorted to trade defence measures, notably anti-dumping, with 250 cases
initiated since 1995, and requested India to address this issue.  Monitoring (300 sensitive items), and
restricting imports (motor vehicles and rubber) to entry through certain ports appeared to have
increased.  She invited India to address this issue.
37. India's export regime had been described as complex.  The Secretariat Report also noted that
policies continued to shield domestic producers from foreign competition, and that having made
selling in the large domestic market more lucrativ e than exporting, such policies had imparted an
anti-export bias to India's trade regime, thereby hampering the economy's ability to generate growth
through exports.  To counter this anti-export bias several schemes allowed importers to benefit from
tariff exemptions, especially on inputs.  The Secret ariat Report indicated that it was unclear whether
these schemes had boosted exports, and she asked  about any plans  to modify or end these schemes.
New legislation on intellectual property rights (IPRs) had been introduced, but enforcement appeared
to be weak.  The Government Report outlined steps taken by India to improve enforcement.  It
referred to the responsibility of state governments for enforcement of copyright law, and said that the
Central Government had requested state governments to set up special cells for copyright
enforcement, headed by senior police officers.  She asked:  (i) how many States had established these
special cells;  (ii) if benchmarks had been established by the Central Government to enforceintellectual property legislation;  (iii) about the im pact of the amendments to the Patents Act on the
pharmaceutical sector, and on public health access to drugs after the adoption of the new legislation.
The Report noted that a further reduction in piracy would benefit the Indian software industry, the
world's largest producer of business software applications, suggesting that the Government would
continue to attach priority to this issue.
38. The Government Report stated that India's export basket was still confined to a limited range
of products, and also described India's Medium Term Export Strategy.  She asked in what
areas/sectors India felt that it had the capacity/comparative advantage to develop its foreign trade
potential further, and to expand its export base.
39. Referring to the Secretariat Report she noted that, according to the Ministry of Small-Scale
Industries and Agro and Rural Industries, all new subsidies to the small-scale industries sector should
be examined for their WTO compatibility.  She asked whether this was still its position.  In the section
dealing with corporate governance, the Report su ggested that it might be necessary for India to
support self-discipline and self-regulation with appropriate legislative and regulatory support.  She
asked  whether:  (i)  the Government had any proposals in this area;  and (ii) there were plans tointroduce a bankruptcy law.
40. Regarding competition policy, the Report noted that the performance of the Monopolies and
Restrictive Trade Practices Commission on enforcement appeared to be weak.  In August 2001, a
Competition Bill had been introduced in Parliament:  she asked what amendments had been proposed
to the published Bill, and when it was likely to be enacted.WT/TPR/M/100
Page 11
(ii) Sectors
41. The discussant noted that agriculture accounted for two thirds of the work force and 22% of
GDP.  Since India's last Review, the main policy changes had been a removal of quantitative
restrictions, and a reduction of distribution controls.  The Secretariat Report referred to a build-up in
grain stocks;  she asked how India intended to address this issue.  The Report noted that Indian
exporters' utilization of quotas for textiles and clothing had, in some instances, been low.  Two
possible reasons were:  India's high production costs;  and/or preferential market access accorded toother exporting countries under regional or bilateral trade agreements.  While the Government Report
addressed the latter, it did not address the competitiveness issue.  She invited comments from India on
this aspect.
42. In services, the constraints in public sector investment in infrastructure, and the findings of
the Economic Affairs Council (EAC) showed that Indi a needed a massive increase in investment and
greater efficiency to support economic growth;  private investment would become increasingly
essential.  This approach appeared to have worked in the telecommunications sector.  She asked how
India intended to attract such investment and to ma nage it in the services requiring such investment.
Regarding the reference to the constraints of infras tructural deficiencies on the IT services in the
Secretariat final paragraph, she asked whether the authorities were satisfied with recent changes in thetelecommunications sector or whether more needed to be done.
43. In conclusion, while trade was a vital component of the overall development strategy, the
extent of benefits deriving therefrom might be of issue.  The  Director-General of the WTO had
recently stated that, should the negotiations launched under the Doha Development Agenda (DDA)
succeed in halving trade barriers in agriculture and textiles, developing countries would gain more
than US$200 billion a year in additional income by 2015.  Similarly, in the services sector, further
liberalization could bring major gains to developing countries as could improved market access andtrade facilitation.  She expected that India would wish the Doha Development Agenda to live up to
these expectations, and would continue to be actively engaged in the work of the WTO.WT/TPR/M/100
Page 12
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
44. Members commended India for its economic reform programme, and for its strong economic
growth recorded throughout the 1990s, despite external shocks.  They were encouraged by India's
continued efforts in economic reform and trade liberalization over the past decade.  This had resulted
in sustained GDP growth at an average rate of around 6%;  social indicators, such as poverty and
literacy rate, had also improved significantly during this period.
45. Members noted the important efforts undertaken by India to adjust its economic and trade
policies to WTO principles and rules.  Members commended India for continuing on the path of
economic reform  as well as for its   recent steps to deregulate and privatize, particularly in the areas of
telecommunications and financial services.  They re cognized India's efforts to further liberalize its
foreign direct investment policy, and encouraged it to address the remaining constraints, and to
facilitate significant increases in foreign investment inflow, which currently accounted for only 1% ofits GDP.  Members also encouraged India to pursue its reforms forcefully.  They believed that India's
reform efforts, and its firm commitment to the multilateral trading system would bring great benefits
to India's future economic growth.  Members expres sed their readiness to work with India in the
context of the Doha Development Agenda (DDA).
46. The representative of Canada said that bilateral trade was showing signs of solid growth, and
that the Canadian Trade Mission to India, led by the Canadian Minister of Trade and comprising over
130 business leaders, had led to a number of business agreements that would strengthen the trade
partnership between the two countries.  The Governme nt and the Secretariat Reports detailed India's
economic and trade regimes, and its rapid growth since the last Review in 1998.  Canada welcomed
the thrust in India's Export Import (EXIM) Policy for 2002-07 on export growth to enhance India's
international competitiveness by removing almost all quantitative restrictions on exports.  India's
average applied tariff had decreased in recent years, and Canada recognized progress made by India inmeeting its WTO commitments.  These measures would help India to integrate further into the global
economy, and reap the benefits of a liberalized multilateral trading system.  While welcoming these
developments, Canada noted that many tariffs remained high , and hoped that high tariffs or non-tariff
barriers would not impede access to high-quality and competitively priced imported goods for Indian
consumers.
47. India had made progress in simplifying and enhancing the transparency of its tariff, although,
a significant gap between bound and applied rates remained.  Predictability for domestic importers
and foreign exporters would be critically improved if more tariffs were bound at lower rates, thus
reducing this gap.  Canada had concerns regarding certain SPS measures applied by India relating to
animal health.  India had recently amended its measures, and Canada was currently assessing them.Canada also applauded India's efforts to reduce domestic controls, and encouraged the authorities to
examine subsidies, particularly in agricultural production and procurement.  Canada called upon India
to assess these subsidies in order to correct the Government's fiscal imbalance, thus benefiting from
removal of production distortions.
48. Canada congratulated India for participating in the National Implementation Review Process,
in the November 2001 TRIPS Council meeting.  As a developing-country Member, India's intellectual
property obligations had largely taken effect on 1 Ja nuary 2000.  India, as was its prerogative, had
chosen the additional transition period, under Article 65.4 of the TRIPS Agreement, for product patent
protection in certain areas of technology.  Canada urged India to take the appropriate steps to ensure
that its domestic intellectual property regime wa s fully compliant with its TRIPS obligations by
1 January 2005.  Canada awaited India's new Patent Act, its Competition Bill, and the new Companies
Act with interest.  Adherence to internationally compatible intellectual property protection regimes
would make India an attractive destination for foreign companies, particularly in areas such as lifeWT/TPR/M/100
Page 13
sciences and information technology.  Similarly, a modern competition law, effectively enforced, was
necessary to prevent any abuse of dominant and other harmful corporate behaviour.  Canadaencouraged India to build stronger economic and trade links with its neighbours, particularly the
members of the South Asian Association for Regional Co-operation (SAARC).  Such initiatives
secured markets for domestic businesses, and helped them gain access to lower-cost goods and
services, while improving the relationship and level of cooperation in the region and allowing the
region as a whole to better reap the benefits of an open trading system.  If India combined a moreopen trading system with domestic reforms and the ability to adapt and innovate, the results would be
beneficial for India and the world.  The success of Indian information technology industries was a
classic illustration.  Canada looked forward to wo rking with India to advance work in the WTO, both
in the Doha negotiations and the various work programmes.
49. The representative of  Switzerland stated that India had great economic potential;  an
encouraging socio-economic factor since the openi ng up of the Indian economy was a fast-growing
new middle class.  Macroeconomic measures taken by India, such as liberalization of FDI and import
restrictions, and steps to strengthen financial ma rkets and maintain macroeconomic stability, had
improved economic growth and relations with the re st of the world.  Switzerland also noted India's
firm commitment to further reform.  While understanding India's gradual approach to economicreforms, Switzerland urged India to proceed as quickly and as sustainably as possible.
50. The consequences of India's interventionist policy were, inter alia,  the complex import
regime, with high duties in many sectors and many  product- or end-user-specific exemptions.  Though
the peak customs duty had declined, other duties still made imported products expensive in the local
market.  The rather large proportion of unbound tariff lines as well as the gap between bound and
applied rates provided scope for uncertainty, and diminished the predictability needed by economic
operators.  For food products, non-tariff barriers, such as labeling, appeared to have increased afterIndia removed its remaining QRs.
51. The QRs on second-hand capital goods imports would seem to need an overhaul.
Compatibility of Indian standards with international standards appeared quite low, with only some
17% being harmonized;  this restrained imports and perhaps exports;  (ii) the setting up of Special
Economic Zones (SEZ) to attract more FDI was a positive development.  However, even thoughincentives were given to units in the SEZs, the existing rigid labour laws did not provide foreign
investors the flexibility needed to operate;  and (iii) the reservation for small-scale industries (SSIs)
that had hampered their growth, and affected their competitiveness in the global market, should be
removed.  Some progress was made in de-reserving a few industries from the SSI list.  However,
more FDI could be attracted into the SSI if the process were expedited.  Investment incentives did notwork without a generally enabling environment, includ ing full respect of intellectual property rights.
Switzerland noted the Amendment to the Patent Bill recently passed by the Indian Parliament, and
looked forward to its official notification, and might come back to it in the competent WTO body.
52. The representative of Japan invited India to explain why direct investment remained low in
India.  Japan had good bilateral relations with India.  The two countries had agreed in 2000 to work
for a Global Partnership between Japan and India in the 21st Century, a multifaceted cooperative
agreement covering a wide range of areas.  India had been a strong advocate of multilateral trade
initiatives, and  Japan expected it to participate in the DDA in a positive and constructive manner.  On
tariffs, although it was aware that customs tariffs were a major source of revenue for the Central
Government, Japan thought that India's tariff was a bit too high.  The average applied MFN tariff in
2001/02 was somewhat lower than in 1997/98, but re mained over 30%.  Furthermore, the current
average applied tariff at 32.3% was very different from the corresponding average bound tariff
expected to be 50.6% in 2005.  Japan was concerned about such a significant disparity between bound
and applied tariff rates.  India needed to improve the predictability of its tariff regime.  JapanWT/TPR/M/100
Page 14
requested India to lower its bound rates, and to narrow the disparity between the bound and applied
rates, through the ongoing market access negotiations.
53. Japan noted that the number of AD measures ta ken by India had risen steadily, especially
since 1997, and asked why there had been such a big increase.  Japan felt that any abuse of anti-
dumping measures for the protection of non-competitive domestic industries should not be permitted,
and asked India's views on this.  According to the Secretariat Report, the majority of the initiations
had been on chemical and related products.  Japan asked for an explanation of the effect of thesemeasures, including investigations, on its domestic industries, which were users of imported chemical
products as well as on domestic chemical industries themselves.
54. On standards and conformity assessment systems, Japan was concerned about the conformity
with the TBT Agreement of the notification of 24 November 2000, which made the Bureau of Indian
Standards (BIS) Certification Mark, mandatory for 133 items.  Japan sought clarification on thepurpose of and need for this measure, and whether it was consistent with the relevant WTO
Agreement;  and on conformity assessment procedures.  Japan understood that the objectives of the
Competition Bill, introduced in Parliament on 6 August 2001, were to check the abuse of anti-
competitive agreements and dominant market position, and to regulate procedures concerning mergers
and acquisitions.  Japan appreciated these efforts and sought a detailed explanation on improvementsin the current Monopolies and Restrictive Trade Practices (MRTP) Act.  Japan appreciated India's
efforts to enforce copyright protection.  Although piracy rates in motion pictures and business
software had been declining, the absolute num ber remained high;  in sound recording and
entertainment software, piracy rates were increasing.  Japan hoped that India would continue to take
further effective measures to combat piracy, and to promote copyright protection.
55. The representative of Uruguay noted India's active role in the WTO and as a defender of
developing countries to achieve a more equitable multilateral trading system.  Since its last Trade
Policy Review, India had continued its trade reform s, including trade liberalization, and a reduction of
barriers to trade.  In 2001, Uruguay's exports to India had increased but there was still a large negative
trade balance for Uruguay.  Continuing reforms to reduce applied tariffs would increase market
access, including for traditional Uruguayan exports, such as leather, wool tops, and wines.
56. The representative of Korea acknowledged India's efforts in the widespread and consistent
structural reforms, including trade liberalization, and expected this success story to continue.  Given
the significant potential for economic cooperati on between the two countries, current trade flows
could not be considered satisfactory for either ec onomy.  As stated in the Government Report, India
had progressively liberalized imports by removing quantitative restrictions.  However, it had undone
much of its liberalization through frequent use of anti-dumping and safeguard measures.  Korea askedIndia to be more prudent in taking trade remedy measures.  India determined in June 2001 that
compound rubber (SBR 1500, 1700 Series) inputs from Korea were not injuring domestic industry.
However, India had not yet withdrawn its anti-dum ping duty.  Korea requested India to provide a
definite time period for withdrawal of this duty.  As stated in the Secretariat Report, India still
maintained relatively high MFN tariff rates.  In addition, India often applied an additional duty of16% or a special additional duty of 4% on imported goods.  Korea requested  India to consider
lowering the level of its tariff rates, and phasing out these additional duties.
57. Korea also raised two concerns on investment.  The Government Report stated that India
granted a Purchase Price Preference (PPP) of 10% to public sector enterprises in its bidding process,
when selecting a plant project builder.  This policy had been initially adopted in January 1992 forthree years, but had been extended four times, and currently was scheduled for termination at the end
of April 2004.  This policy had a very negative effect on fair competition, and Korea invited India to
express its views on this matter.  As stated in  the Government Report, India required foreignWT/TPR/M/100
Page 15
construction companies receiving plant orders in India to submit a 'Counter Bank Guarantee' to a local
bank and then receive a 'Bank Guarantee' from the local bank in order to construct.  This doubleguarantee requirement was very burdensome for many foreign companies, becoming an obstacle to
their business in India.  If this requirement was applied only to foreign companies, it needed to be
examined in the light of the WTO's national treat ment principle.  Foreign construction companies
operating two or more projects in India had difficulty in managing their funds because they were only
allowed to establish a liaison office and an individual project office but not a branch office.  Koreaasked about plans to permit the establishment of branch offices by foreign construction companies.
58. The representative of the European Union said that the 1994 Cooperation Agreement, and a
Joint Political Statement, formed the current institutional basis for a broad EU-India political
dialogue.  In addition, two EU-India Summits had been held recently and the third Summit, to be held
in October 2002 was intended to enhance economic cooperation.  A parallel business summit hadgenerated recommendations on pro-trade and investment measures in several key sectors.  Noting that
the EU had spent €2 billion  in development cooperation with India since 1976, and that and the
current gross annual allocation for India amounted to about €80 million, he stated that new
programmes would be prepared, inter alia , on trade and investment development, directly linked to
the DDA.  The EU saw the need for enhanced trade and investment.  India ranked 19
th among the
EU's trading partners, with a share of 1.2% of total EU trade, whereas the EU was India's leading
commercial partner.  The composition of India's tr ading basket with the EU had remained essentially
unchanged for the last ten years:  more than 50% of Indian exports were still textiles and clothing,
gems and jewellery, leather and leather articles.  The EU also welcomed India's initiatives for a more
liberal foreign direct investment policy.  However, there was a need for continued reform to improve
the infrastructural environment to increasingly attract FDI.
59. With the successful start of the new trade round Members would have to cooperate more
constructively on trade issues to make progress.  More effort was now needed to overcome
differences of views and to find a common denominator on the various negotiating issues.  Everyone
was aware of India's domestic situation with a sometimes hostile public opinion that found the WTO
an easy scapegoat for home-made economic problems.  However, to achieve further significant
reduction in poverty, India needed higher GDP growth.  The EU agreed with India that there was animportant linkage between trade and economic growth.  Fewer restrictions and further structural
reform would help India to raise its share in world trade, thus increasing its annual real economic
growth rates, which would contribute in tackling its domestic problems.  Multilateral negotiations
would boost international economic growth in the long term.  In the short run, they had restored
business confidence.  The WTO would help to ensure that the most challenging aspects ofglobalization would be controlled.
60. The EU was concerned that India seemed to have replaced quantitative restrictions, with a
maze of non-tariff measures, sometimes violating WTO rules.  The EU had serious concerns about
composite duties, taxes, and charges on a number of products that were subject to GATT Article XX
and XXI import restrictions, especially for wines and spirits.  Imported spirits were subject to highertaxes than the domestic product.  The EU asked India to remove this discrimination promptly.
Despite efforts to reduce customs tariffs, there was still a need to cut down the high number of rates,
and to simplify the complex tariff structure.
61. While India had taken measures to reduce import licensing and tariff restrictions, other import
measures seemed to have increased.  India had become one of the most prolific users of anti-dumpingmeasures, and EU companies were amongst the most frequently affected.  The EU sought
explanation regarding the increase in AD measures.  India had stated in its Report that government
procurement was a trade barrier faced by Indian products and suppliers in foreign procurement.  The
EU emphasized that joining the WTO Agreement on government procurement, could be a way forWT/TPR/M/100
Page 16
India to eliminate these barriers.  Moreover, India could contribute actively to the completion of the
Doha mandate on transparency in government proc urement, and to developing the elements for a
future multilateral agreement provided that a capacity-building assistance tool be set up.
62. India had introduced new laws on intellectual property rights:  while the EU commended
efforts to educate the public on the importance of compliance with these laws, it was concerned about
their weak enforcement, and asked about progress in this regard.  The EU also regretted that neither
the Government nor the Secretariat Report contained a section on the important matter of professionalservices, and sought detailed information on this sector, including any recent policy changes.  The EU
also sought clarification on trade facilitation, and expressed appreciation for the constructive and
thoughtful role played by India in the WTO discussions.  The EU believed that a considerable
strengthening of the WTO rules in this area would benefit India's border controls, its trade
performance, and its attractiveness to investors.  The EU supported India's "Vision and Strategy” plan
for modernizing and simplifying its customs procedures.  The EU welcomed India's commitment to
the WTO, and notably to the MFN principle, which was a strength of its trade policy even though its
market openness was less than optimal.  The EU expressed its readiness to support India in its future
efforts, including for market access.
63. The representative of Colombia congratulated India on its economic and social perfomance
since the 1990s in spite of external shocks.  Colombia also noted India's trade policy initiatives,
including the elimination of QRs, rationalization and simplification of the tariff, liberalization of its
investment regime, and introduction of a new law on competition.  Colombia, like India, believed that
exports were an engine for growth, and welcomed India's policy in this area.  Colombia encouraged
India to continue to simplify its tax system, in particular its tariff structure, and to rationalize
exemptions in order to enhance transparency and ef ficiency.  Colombia noted that bilateral trade was
marginal, and hoped to improve its trade balance with India.  In this regard, Colombia welcomed arecent initiative for cooperation with India in informatics services as it believed that such strategic
alliances would provide Colombia with software market opportunities in Latin America.  The
representative acknowledged India's role in the GATT and the WTO in helping developing countries
to reap the benefits of the multilateral trading system.
64. The representative of Hong Kong, China  no ted that India and Hong Kong, China had been
close trading and economic partners for years, and shared views on a number of systemic issues, such
as the need to bring the textiles and clothing sector under WTO rules.  The two countries had
cooperated for many years on this project and on information technology and services projects.
Hong Kong, China shared India's perception on the need to strengthen the multilateral trading system
to protect the less powerful economies.  The commitmen t to the multilateral system was of particular
importance given the proliferation of regional and preferential arrangements in the past decade.  India
had played a crucial role in the launching of th e DDA, which stipulated a balanced and broad-based
work programme that reflected the interests and concerns of all WTO Members, both developing and
developed.  The negotiations provided ample opportunities for developing economies to enhance trade
and investment opportunities, to strengthen WTO trade rules, and to address development and otherconcerns.  The deadlines for the negotiations were tight but not unachievable, and Hong Kong, China
looked forward to working closely with India on this.
65. India had reduced its average applied tariff for non-agricultural products from 35.4% in
1997/98 to 31.1% in 2001/02.  There was room for fu rther improvement including lowering the bound
rates and further reducing applied rates.  Hong Kong, China was encouraged by India's recent reformproposals, including plans to reduce peak rates in 2002/03, and to streamline standard tariff rates for
non-agricultural products by 2004/05.  India had taken important steps in trade facilitation, including
in IT and electronic services.  Progress in negotiations on non-agricultural market access and on trade
facilitation, expected to take place after the Cancun Ministerial, would provide further tradeWT/TPR/M/100
Page 17
opportunities for developing economies, and help India achieve its stated objective of enhancing its
share in global trade.  Hong Kong, China would wo rk closely with India in these two important areas.
66. Hong Kong, China was pleased to see India's continued liberalization of trade in services and,
in some cases, beyond its scheduled commitments in the UR.  India's policy in telecommunications
was generally more liberal than its scheduled bindings;  it had also advanced its liberalization by
allowing private sector competition in internati onal long-distance service in 2002.  The rapid growth
of the highly successful software sector was also  noteworthy.  Hong Kong, China encouraged India to
continue its liberalization efforts, and to extend its commitments in the current round of services
negotiations.  Preference for procurement through local supplies had been reduced substantially over
the past decade.  Notices for tender and procurement procedures were made available on the Internet.
Hong Kong, China encouraged India to further enhance transparency of its government procurement
system, and to offer a level playing field for all suppliers.  Hong Kong, China was concerned aboutthe significant increase in AD measures taken by India in recent years.  India had the right to resort to
AD measures that were consistent with GATT Article VI and the ADA, however, their frequent use
had, to a certain extent, nullified the benefits of trade liberalization.  Hong Kong, China encouraged
India to be more restrained in its use of AD ac tions, and looked forward to working with India in
improving and tightening AD disciplines.
67. The representative of Brazil  reiterated his country's appreciation for India's role in the WTO.
India had been extremely influential in denouncing the inequities faced by developing countries in the
international economic arena, as well as in promoting a more equitable multilateral trading system.  In
the GATT and now in the WTO, Brazil and India had formed a solid partnership that was also turning
increasingly relevant for bilateral relations.  Noting the Secretariat Report's suggestion that a re-
examination of certain aspects of India's trade and investment regime might strengthen economic
growth, Brazil was strikingly aware of the need to reconcile sound economic policy and socialobjectives, and believed that there were many lessons to be derived from India's recent economic
performance.
68. The representative of New Zealand said his country shared India's recognition of the need for
fundamental reform of the global agricultural trading system.  This required substantial improvements
in market access, the elimination of export subsidies, and substantial reductions in domestic support.New Zealand looked forward to working constructively with India in the agricultural negotiations.
With respect to India's approach to agricultural market access, New Zealand was concerned about the
increase in the average MFN tariff for agricultural products from 35% in 1997/98 to 41% in 2001/02.
New Zealand also had reservations about the extent of tariff escalation on agricultural forestry
imports.  High applied MFN tariffs continued to provide high protection to Indian industry.  The useof substantial and additional duties, with numerous exemptions, meant that the tariff could be a
complex and opaque instrument.  New Zealand looked  forward to working with India in the relevant
negotiations to address some of these issues.  Such an approach to tariff protection could have a
negative impact on exporters, and lead to sub-optimal outcomes for Indian domestic economic
interests.
69. New Zealand agreed with India that the need to eradicate hunger, and to ensure sufficient
domestic supplies of food to meet demand was important.  However, attempts to achieve food security
had created distortions in the economy, through higher support prices and financially and
environmentally unsustainable input subsidies.  In New Zealand's view, food security could only be
achieved through open markets, rather than striving for self-sufficiency, while isolating markets led togreater climatic and input risks, and an inefficient global market.  He encouraged India to take these
views into account.WT/TPR/M/100
Page 18
70. New Zealand was pleased that India had recently passed legislation on the Protection of Plant
Varieties and on Farmers Rights to fulfil it s TRIPS obligations regarding an effective sui generis
system of protection for plant varieties.  New Zealand hoped that this action might help alleviate some
of the problems India had experienced concerning the protection and the appropriation of its plant
varieties.  India's explanation of measures taken recently in trade facilitation and customs clearance
were also welcomed.  New Zealand looked forward to further dialogue with India on securing global
improvements on trade facilitation in negotiations in this area.  India was a key advocate ofdevelopment issues in the WTO, and had much to contribute to advance trade and development issues
as set out in the DDA.  New Zealand looked forward to working constructively with India in areas
such as special and differential treatment, and ou tstanding implementation issues to take into account
developing countries' interests.  New Zealand also had an interest in working with India to ensure that
WTO rules on regional trading arrangements ensure d their compatibility with the objectives of the
multilateral trading system.
71. The representative of the United States said that bilateral trade, especially imports, had
increased significantly since 1995;  that, after Mauritius, the United States was the second largest
foreign direct investor in India.  He noted efforts by India over the last decade to stabilize and
improve the economy;  the benefits were evident in the increasing number of internationallycompetitive Indian firms, products, and exports.  In the WTO, the positive effect was the dismantling
of India's long-standing regime of quantitative rest rictions.  However, many areas of India's economic
and trade system needed improvement.  Continued e fforts to reduce barriers to trade for imports and
exports, improve the competitiveness of productive sectors, and diversify the economy, were equally
important.
72. The United States was concerned principally about India's current duty and excise structure;
non-tariff barriers;  certain programmes that might constitute subsidies;  and the apparent export biasin the textiles and apparel sector.  These types of measures sent an unfortunate signal to investors.
U.S. investors in India were reluctant to expand oper ations due to the high cost of importing necessary
inputs and materials.  He asked about India's plans to simplify its tariff and excise structure, and to
reduce rates, which were prohibitively high.  The United States also looked forward to hearing more
about the statement in the 2002/03 Budget regarding India's intention to bring its peak tariff down to
20% by the 2004/05 Budget, to be announced in February 2004.  The United States urged further
reductions to stimulate the economy and to encourage competitiveness.
73. The United States was increasingly concerned by a proliferation of non-tariff barriers, often
applied with minimal notice to importers, and often without the required notification to WTO
Members and WTO Committees.  These measures were incredibly disruptive to trade, and were oftenimplemented without clear justification nor on the basis of sound science.  The United States urged
India to clarify a variety of programmes that might constitute subsidies and, where the programmes
did meet the definition of subsidies under the Agreement on Subsidies and Countervailing Measures,
to follow proper notification procedures.
74. The United States looked forward to hearing about changes in the textile and apparel sector.
The Secretariat's Report presented a picture of a complex and opaque import and export regime,
biases in favour of exports and against imports, and a domestic industry structure that was distorted
with inefficiencies, and exacerbated by massive go vernment support.  Taken individually or together,
these policies had created a closed internal market, and reliance on two export  sectors.  The
United States encouraged India to undertake the necessary reforms.
75. The Secretariat Report noted that, despite progress, there were a variety barriers to trade and
investment that still created important distortions to competition, and were potential impediments to
India's long-term development.  India had the opport unity to address many of these issues, through theWT/TPR/M/100
Page 19
DDA.  By fully participating in the new negotiations, and undertaking domestic reform, India could
improve export opportunities, reduce tariffs, improve its customs regime and attract new investment.The United States was ready to work with India to this end.
76. The representative of Malaysia noted that India had undertaken a number of reforms to
improve its competitive position, including reducing tariff rates, removing import licensing
restrictions maintained for BOP reasons, liberaliz ing investment restrictions, and strengthening its
banking system.  Malaysia's trade with India was substantial, and concentrated mainly in petroleum,palm oil, electronic equipment, meat products, textile yarns, agricultural produce, and wood products.
Malaysia welcomed India's intention to reduce the tariff to two tiers of 10% and 20% by 2004/05, and
hoped there would be no exceptions.  Despite the current reduction of peak duties to 30%, 2% of tariff
lines exceeded the peak rate, and included palm oil, a product of interest to Malaysia, where duties
were recently increased to between 65% and 85%, enlarging the disparity between tariffs imposed onthe various vegetable oils.  India had also reformed the investment regime;  further reform would
accelerate investment, including from Malaysia.
77. The representative of Singapore noted India's rapid economic growth over the last decade and
its target of higher real GDP growth of 7-9% fo r the immediate future.  Singapore welcomed India's
commitment to a more open and liberal economy.  Reforms, including a decrease in public sectorinvolvement in industry, revamping legislation on competition, fiscal and tax reforms, reforms in
corporate governance, and a significant liberalization of its services sectors, especially in
telecommunications and financial services, would certainly contribute to higher efficiency of India's
industry.  India's intention to reduce tariffs towards ASEAN levels was a positive development.
Singapore looked forward to seeing this as on e of the concrete outcomes of the ongoing Doha
negotiations.  A major development for the period under review had been India's removal of all import
restrictions maintained for balance-of-payments reasons.  India had also encouraged exports byeliminating most export restrictions under the five-year EXIM policy.  India had also introduced
computerization at most major ports, and air cargo complexes.  The automated customs clearance
system, which enabled on-line assessment, duty payment and clearance procedures, and connectivity
with clearing agents, was also welcomed as it would expedite flow of goods across borders.  The
Indian authorities were committed to reducing cargo clearance times.
78. While applauding India's reforms to liberalize its trade, and to decrease import licensing and
tariff restrictions in the period under review, concern was expressed about a marked increase in AD
actions over the same period.  Over the last year, India had initiated no less than ten AD investigations
against Singapore's exports, and it had imposed preliminary duties on several chemical products.
These duties had severely affected Singapore's exports to India.  Singapore and India were partners inthe WTO and in other international fora;  Singapore valued its trading relations with India.  Although
anti-dumping measures were permissible under the WTO, there was widespread recognition that such
measures restricted trade if not properly implemented.  This sudden surge in anti-dumping actions was
inconsistent with India's commitments to improve efficiency in its domestic sectors, and with its
efforts to promote international trade.
79. The representative of the Philippines noted India's wide-ranging reforms, policy restructuring,
and structural adjustment since 1991.  India deserved congratulations for the appreciable gains in
poverty eradication, from 34% to 26% between 1993/94 and 1999/00.  The Philippines encouraged
India to continue on this path.  With a huge economically active population to sustain domestic
economic expansion, and a magnet for investment resources, side by-side with multilateral tradeliberalization, and India's competitive ability to benefit from it, India had all the ingredients to achieve
its objectives.  In order for India to justify furt her reform to its stakeholders, the  international
community needed to ensure market access rather than selective preferences or, even worse, non-
MFN treatment in important markets for both goods and services of interest to India.  The SecretariatWT/TPR/M/100
Page 20
Report noted that despite a liberalized FDI regime, FDI has scarcely improved.  Furthermore, with the
rise in cross-continent mega-mergers, regional re-alig nments of markets, like the entry of China and
the transition economies in the WTO, India had to form more compelling growth, profit, and risks
strategies to advance globally.  The Secretariat Report suggested that infrastructure needs, human
resources for SMEs, and information technology were among the most important factors to that end.
India had simplified its tariff structure and eliminated quantitative restrictions on imports.  The
Philippines lauded India's efforts to reduce explicit subsidies, and understood fully the difficultiesassociated with their reduction.  Nonetheless, th e Philippines expected India to take the appropriate
decisions and implement programmes to undertake these reforms.
80. The representative of Mauritius noted the two countries' long-standing relationship, which
had been consolidated, when Mauritius became independent in 1968, through a number of agreements
in economic, technical, and cultural cooperation, double-taxation avoidance, and the promotion andprotection of investment.  Mauritius also received technical assistance under a Technical Assistance
Programme.
81. Trade with India had risen steadily and Mauritius hoped for continued growth and balance in
trade relations.  Mauritius and India were members of the Indian Ocean Rim Association for Regional
Cooperation (IORARC) whose 19 members expected economic cooperation to take place in a number
of areas.  Mauritius appreciated India's support for the Work Programme on Small Economies for the
fuller integration of small, vulnerable economies into the multilateral trading system, and for the
concerns expressed by single commodity producers and small island developing states in agriculture.
82. The new Foreign Exchange Management Act (FEMA) had replaced the Foreign Exchange
Regulation Act (FERA), which was considered too stringent.  The move towards full capital
convertibility would no doubt help to attract non-resi dent Indians, who could repatriate their current
earnings to India.  Mauritius also noted that the ambitious programme of state disinvestment andprivatization of state-owned enterprises had been fairly successful, and that resources previously
allocated to that sector would be better utilized.  The services sector remained crucial to India's
economy as it accounted for 49% of GDP.  Services, such as telecommunications, banking, insurance,
roads, ports, and air transport had been opened to private investment.  Many delegations shared India's
stand that the WTO negotiations should aim at incr easing the participation of developing countries in
trade in services, and that appropriate flexibility be given for individual developing country Members
to liberalize in line with their development, and national policy objectives.  Another important
emerging sector of India's economy was software.  Mauritius noted with satisfaction that India had
taken a number of steps to ensure that exports in software would reach US$50 billion by 2008.  There
were plans to build additional software technology parks.  To formulate and implement policies forsoftware, the newly established Ministry of Co mmunication and Information Technology was being
assisted by top professionals from the information technology industry.  Mauritius appreciated India's
interest in promoting the development of th e information technology park in Mauritius.
83. Mauritius noted India's rapid growth and the decline in poverty and was interested in the
Planning Commission's examination of how India's per capita income could be doubled over the next
decade.  Since its last Trade Policy Review, India had carried out significant reform of, inter alia ,
import restrictions, tariffs, FDI, taxes, and services, such as telecommunications, banking, and
insurance.  The Secretariat Report indicated that Mauritius was the largest foreign investor in India.
Mauritius clarified that it provided professional services for the handling of capital investment
overseas.  Hence, it was Mauritius as a financial centre that accounted for such investment, which wasnot necessarily direct investment by Mauritian nationals.  This demonstrated that cooperation
agreements could bring dual benefits to developing countries.  Mauritius contributed to India's
attraction as a destination for foreign capital;  it would also appreciate receiving such capitalWT/TPR/M/100
Page 21
investments.  Mauritius asked the Secretariat to clarify this issue, through a footnote in the final
Report.
84. The representative of Norway noted that al though India's share of world trade was, like
Norway's, close to 1%, India was among the top 20 tr aders.  Bilateral trade between India and Norway
was modest, but there had been a significant increase over the past years.  Textiles and clothing
constituted one third of Norway's imports from India, greatly facilitated by the removal of all textiles
quotas as of 1 January 2001, and a liberal tariff regime on textiles and clothing.  Norwegian exports toIndia included nickel and nickel products, machinery,  electronics, and optical instruments.  There was
great potential in fish and fish products;  however, realizing it would require significant improvements
in market access.  Tariff rates on salmon, one of Norway's major exports, had increased from 16.5%
to 35% by 1 April 2000, while applied tariff rates on most seafood products from Norway were, at
30%, prohibitive.  In addition non-tariff duties such as a "surcharge on basic duty" of 3.5%, and aspecial additional duty of 4% both significantly  undermined trade.  Norway encouraged their
elimination, and asked about India's intentions in this regard.  In the ongoing negotiations, Norway
shared India's concerns regarding tariff peaks, high tariffs, and tariff escalation, and was pleased that
their reduction or elimination had a prominent place in the negotiations mandate from Doha.
85. As pointed out in the Secretariat Report, the tariff regime was unreasonably complex.  In
addition to a lack of bindings and large gaps between bound and applied rates, the widespread use of
tariff exemptions made the tariff structure discriminatory and unpredictable.  Norway, therefore,
welcomed indications that a simplification was planned, with only two tariff levels for
non-agricultural products (of 10% and 20%);  she asked whether this would cover fish and fish
products, and hoped it would do so at the lower level.  According to the Secretariat Report, India was
abolishing import licencing requirements for a number of products.  Norway asked whether the
remaining requirements included fish or fish products.  Norway encouraged India to further simplifytrade procedures, and increase transparency.  Tax administration reform seemed to be another step in
the right direction, not least to expand the public revenue base and accelerate tariff reductions.
Norway thanked India for its statement in this regard.  The Secretariat Report was rather brief on
maritime transport, and did not elaborate on the Indian rules and regulations in this sector, which was
of crucial importance for international trade.  Norw ay noted that India had become an active user of
anti-dumping measures.  While understanding the need to use AD measures, Norway hoped that India
would participate in the concerted effort to strengthen WTO disciplines on antidumping to prevent
abuse, and to bring these rules in line with present realities.
86. The representative of Thailand reiterated and supported views expressed by other delegations
on anti-dumping measures taken by India, which had increased steadily in recent years.  As of 2002,
India had initiated 11 anti-dumping cases against Thai products.  The investigation procedures had
usually caused great difficulty, impeding trade flows.  The Government Report stated that India had
progressively liberalized its import market by removing quantitative restrictions.  Thailand
commended these efforts, and asked India to be more prudent in taking anti-dumping measures.
Thailand shared Japan's view that any abuse of anti-dumping measures for the protection of domesticindustries should not be permitted.
87. The representative of Jamaica recalled that over the last few years, India had been ranked
among the world's 25 emerging markets, pointing to the country's potential to become one of the
largest and leading economies in the world.  Since 1991, India had embarked on a far-reaching
economic reform programme, and had been able to achieve strong economic growth.  Other economicand social indicators such as inflation, foreign exchange reserves, exports, poverty, and employment
had also improved.WT/TPR/M/100
Page 22
88. India had entered its second decade of reforms with a renewed commitment to consolidating
previous successes and to deepening the process.  In its five-year development plan for 2002-07, Indiaacknowledged the need for further economic reforms to ensure sustained economic development and
poverty reduction.  The determination to achieve these goals was reflected in the various policy
initiatives, including reduction of peak tariffs from 45% to 30% over the last four years;  removal of
quantitative restrictions primarily on exports;  removal of import licensing restrictions maintained for
balance-of-payments reasons;  a decline in the number of industries requiring compulsory industriallicensing;  lowering of customs tariffs;  a more liberal foreign investment regime;  and deregulation of
critical sectors, such as banking and insurance.
89. The Secretariat Report noted that the authorities hoped to increase real GDP growth to
between 8% and 9% over the period of the current five-year plan.  The authorities had emphasized
that this could only be achieved if the reform process was deepened and if India increased its share ofworld trade from 0.67% to 1% by 2007, requiring an annual export growth rate of 11.9%.  Thus, it
was important to note that India had undertaken reforms to remove existing anti-export biases, and to
increase exports.  Also of relevance was the reco gnized need to raise relatively low investment
inflows.  India had embarked on a programme of investment liberalization to attract increased
investment;  this had resulted in most sectors now being open to FDI.  Despite the reform, however,India had been unable to attract the level of investment needed, although there was evidence of a
modest improvement.
90. The need for greater fiscal discipline had been recognized and steps were being taken to
reduce government expenditure and implement tax reform.  High interest rates and central
government debt had acted as deterrents to investment.  The overall public sector deficit (10.6% of
GDP in 2001/02) had tended to crowd out private in vestment, and had hampered investment in basic
infrastructure required to attract investment, a situation which the Government recognized and one itwas working to reverse.  The Secretariat Report noted that the revenue implication of lowering
existing tariffs was one of the difficulties of fiscal reform as customs and excise duties were the main
source of Government revenue.  Nevertheless, India had undertaken to reduce customs tariffs, and this
would have the effect of lowering the contribu tion of customs tariffs to government revenue, a
challenge faced by many developing countries.
91. The representative of Bangladesh appreciated India's economic performance in spite of the
global economic slowdown.  The two countries had en joyed excellent bilateral relationships since
their independence in 1971.  Trade between the two countries had increased steadily, and Bangladesh
hoped that this good relationship would continue in the future.  However, Bangladesh was concerned
about the trade imbalance in favour of India, which was explained by high tariff rates faced byBangladeshi products.  In addition, non-tariff barriers were affecting Bangladesh's export promotion
to India.  Bangladesh hoped that India would further reduce and streamline its tariff structure, and
remove non- tariff barriers.  Bangladesh noted the increase in AD measures in recent times, even
against countries whose share in India's imports was very low.  Bangladesh's exports of lead acid
batteries to India had been denied through the imposition of anti-dumping duties.  Bangladesh hopedthat India would remove such measures.
92. The representative of Hungary commended India for its economic reforms and trade policy
based on greater openness, which had contributed to improved economic performance and
development.  However, some areas of concern remained.  Hungary welcomed the removal of all
import restrictions maintained for balance-of-payments reasons, as a result of which customs tariffhad become the main form of border protection.  In spite of recent efforts, India's tariff remained
complex.  Tariffs were relatively high, with the average bound rate considerably higher than the
average applied MFN rate, leaving scope for raising applied rates, as had happened recently for some
agricultural products.  Most imports faced additional and special additional duties;  as a result, theWT/TPR/M/100
Page 23
tariff for alcoholic beverages, such as wines, ranged from 100% to 210%.  Hungary appreciated the
increase in bindings, and encouraged India to continue tariff reductions, and simplify and furthermodernize its customs and import procedures.
93. According to Hungarian exporters, India di d not grant import licences for buses, only
domestic production was authorized.  Hungary sought clarification on this.  The lack of transparency
in tendering procedures was a substantial barrier to Hungary's exports to India:  in 2001, even for an
awarded contract for cranes the Hungarian exporter could not supply the cranes because the contractwas terminated.  Transparency in this area should be enhanced.  The Patents Bill did not include
product patents for drugs and chemicals.  India had the right to ask a transition period to meet its
obligations under the TRIPS Agreement, which Hungary hoped would be met by 2005.  Economic
and trade relations with India had been traditionally good and Hungary hoped that further trade
liberalization, and enhanced transparency would improve its market access.
94. The representative of Chile acknowledged India's economic and trade reforms.  Chile
appreciated India's plan to unify, simplify, and reduce tariffs to bring them towards ASEAN levels,
and noted that less than three quarters of India's tariffs were consolidated, in particular for sectors of
importance to Chile, such as fishery, minerals, and metals.  It hoped that ongoing negotiations would
help to improve this situation.  Chile encouraged India to pursue its tax and fiscal reforms so as to
improve its competitiveness and production.  The agriculture sector also needed reforms, including
reduction of price controls, commercializing enterprises, exports restrictions, minimum prices, and
production incentives.  This sector should also be open to foreign investment.  Chile invited India to
strengthen its regulatory framework so as to prom ote foreign investment:  the competition law was an
important step in that direction.  Chile hoped th at India would complement its domestic reforms with
constructive participation in the multilateral trading system.  Chile invited India to temper its use of
AD measures.  A bilateral trade agreement between the two countries was being discussed.  Chilerecalled that, as mentioned in the Secretariat Report, in 1999 India had adopted the Geographical
Indications of Goods Act, and noted that no geographical indications had as yet been registered nor
were there any pending registrations.  It invited India to explain the reasons for this situation, and to
provide an evaluation of the above-mentioned Act.
95. The representative of Honduras said that India's policy reforms had resulted in high economic
growth over the past years.  There had been a positive impact on growth and poverty reduction
through the elimination of licences and of QRs on balance-of-payments grounds, together with greater
investment liberalization, a less restrictive industrial policy, reform of telecommunications, the
financial sector, and other key areas, and tariff policies that were consistent at the regional level.
Honduras was aware of the high cost of these polici es.  India's policies had been accompanied by its
active participation in the WTO, in particular the functioning of the multilateral trading system, and
support developing countries' interests.  Honduras encouraged India to continue to support the
promotion of preferential access for developing country exports thus increasing their participation in
world trade, and to pursue its reforms, especially on tariffs and the administration of its anti-dumping
policy.
96. The representative of Sri Lanka noted that India's positive achievements had been possible
because of the economic reform pursued with the objective of increasing integration with the world
economy, as stated in both the Secretariat and the Government Reports.  The country had been helped
onto a higher growth path by the discontinuation of the special import licensing scheme;  trade
facilitation measures;  reforms in tax administration, exchange market, industrial licencing, and inbanking and insurance;  and reforms in the contro l system in petroleum, sugar, agriculture, and in
infrastructure, such as telecommunications and power.WT/TPR/M/100
Page 24
97. In the Government Report, India had highlighte d impediments to growth of its international
trade, including non-tariff barriers, such as restrictive import policy regimes, standards, testing,labelling and certification requirements, export subsidies, and barriers on services.  Quantitative
restrictions specially in textiles were identified as one of the most important non-tariff barriers to
trade.  Sri Lanka shared India's concerns.  The Report also highlighted issues relating to agriculture,
technical barriers to trade, intellectual property rights, and services negotiations.  Sri Lanka believed
that these would be addressed in the ongoing negotiations.  The Report stated that althoughagriculture's contribution to employment and GDP were large, India's share of world exports remained
less than 2%.  The situation in countries like Sri Lanka, was similar.  Therefore, the ongoing
negotiations should provide flexibility to developing countries to address food security concerns,
while market access for their agricultural products became extremely important.
98. Sri Lanka recognized that India had been a strong advocate of multilateral rather than regional
trade initiatives, and was a party only to a few regional trading arrangements.  Nevertheless, Sri Lanka
and India were members of the SAARC, and had exchanged tariff concessions under the South Asian
Preferential Trading Arrangement (SAPTA).  India and Sri Lanka had also signed a free-trade
agreement on 28 December 1998, which entered into force on 1 March 2000.  Under this agreement,
India would phase out tariffs over three years, while Sri Lanka would phase out its tariffs overeight years.  While Sri Lanka had a relatively large list of items on the negative list, which would not
be subject to tariff reduction, India had a shorter negative list, in recognition of lower level of
industrialization in Sri Lanka, and its need to protect small enterprises.  Given the large trade deficit in
favour of India, this FTA would facilitate an increase in Sri Lanka's exports to India.  Sri Lanka
thought it valuable for trade and investment expansion.  Sri Lanka believed that international trade
was vital for development, and developed country Members of the WTO should address India's
market access concerns.
99. The representative of China said that India's structural reform programme had resulted in a
sound macroeconomic environment.  Concrete measures mentioned in the Government Report had
provided new opportunities for expansion of bilateral economic and trade relations between China and
India, which were complementary in several economic and trade areas.  Chinese enterprises had
comparative advantage in a number of infrastructure sectors, such as roads, ports, and power.  Chinabelieved that despite the rapid development of bilateral trade in the past few years, the volume was
still small given the economic weight, size, and magnitude of the two countries.  China believed that
there was great potential, and hoped that mutual trust and understanding could be further increased
between the business communities and governments of the two countries.
100. China noted with concern the increased use of anti-dumping measures;  since 1992 India had
initiated 51 cases against Chinese products.  In addition, investigation procedures seemed to be
problematic.  In a number cases Chinese enterprises were not given sufficient time to respond to or
prepare for hearings.  In some cases, the evidence fo r determination of injury or threat of injury was
not convincing evidence and China sought clarification in this regard.  Chinese enterprises also
complained about the lack of transparency:  China hoped to see concrete efforts at both central andstate government levels in this regard.  The tariff was one of the major barriers to trade with India.
Chinese industries were concerned about high tariffs on motor-cycles, household appliances, and
textiles and clothing.  China hoped that special efforts could be made on tariffs to pursue structural
reform and trade liberalization, particularly in the framework of the ongoing market access
negotiations.
101. The representative of Turkey sought clarifications on customs duties, which Turkey
considered to be high;  tariff escalation in certain sectors was an obstacle for Turkish products.
Additional duties and special additional duties seemed to discriminate between imported and domestic
products:  these additional duties, which varied across products, increased the already quite highWT/TPR/M/100
Page 25
duties.  Customs procedures were often very long gi ven the complexity of India's tariff regime, and of
its exemptions, which were based on different criteria and were not transparent.  On intellectualproperty rights, it was currently difficult to obtain a patent from India's Patent Office, a situation that
encouraged counterfeiting.  He mentioned the case of a Turkish company, which had filed an
application more than a year ago, and had yet to obtain it.  As a result, glass items produced by this
company were being counterfeited by India companies, and exported to neighbouring countries.
Turkey asked whether India planned to revise its policy in this area.
102. The representative of Czech Republic noted steps taken by India to broaden and accelerate
structural reforms, including in information technology and telecoms.  They illustrated India's ability
to compete globally.  India had gone a long way in further opening up its economy, through
contractual and autonomous liberalization measures.  It had significantly cut tariffs, and removed all
import restrictions maintained for balance-of-payments reasons.  During the period under review,India had strongly supported the multilateral trading system.  Additional efforts were needed,
however, to increase transparency and predictability in the trade policy framework.  Reductions in
applied MFN tariffs, which remained high, were also needed as they continued to shield domestic
industries, and obliged consumers to pay excessive prices for inputs.  An intention to move towards
two standard rates of tariff by 2004/05, 10% for raw materials, intermediates and components, and20% for final products, was a step in the right direction.  There would be more significant payoffs if
the gap between applied and bound rates was also addressed.  The Czech Republic looked forward to
seeing more transparency with respect to anti-dumping measures.
103. The representative encouraged India to work with the Czech Republic and other WTO
Members to add momentum to trade and investment liberalization, consolidating domestic economic
reforms, and strengthening the multilateral trading system, through the ongoing round of trade
negotiations.  The Czech Republic was also interested in developing its bilateral relations with India.The two countries had signed a trade agreement as well as bilateral investment, protection, and double
taxation agreements.  In this framework, the Czech Republic provided preferential treatment to a large
number of Indian goods, and would explore ways to enhance trade and economic cooperation with
India.
104. The representative of Cuba noted India's efforts to comply with its WTO obligations, and
welcomed the economic and trade reform it had undertaken.  These measures had contributed to high
economic growth, and more stable trade regime, but also to improving social development indicators.
India was an important trading partners for Cuba and Cuba wished to improve their bilateral relations.
The two countries shared common positions in inte rnational fora, and the objective of South-South
cooperation.  In this context, Cuba noted preferential treatment granted by India to developing andleast developed countries under the Global System  of Trade Preferences (GSTP).  As a strong
supporter of the multilateral trading system and the rights of developing countries, India was an
example to many developing countries.  Cuba hoped that in the framework of the DDA, India's efforts
would be compensated by the elimination of trade restrictions and other barriers to trade, which
restricted market access for products and services originating from India.  Cuba encouraged India tocontinue on this path.
105. The representative of Botswana stated that his country was committed to further
strengthening and deepening its bilateral cooperation with India, and recalled that numerous trade and
investment missions to India had taken place towards this effort.  Developing countries greatly valued
India's leadership in the WTO and the UN, as it was clearly a major player in both organizations.  Therepresentative recalled India's prominent role at  the Doha Ministerial Conference in November 2001,
which testified to India's commitment to the multilateral trading system.  India was one of the leaders
among developing countries in telecommunications and information technology.  It was one of the
few developing countries with domestic manufacturing capacity in drugs and medicines, consistentWT/TPR/M/100
Page 26
with the Doha Ministerial Declaration on TRIPS and Public Health, and access to affordable
medicines.  Botswana looked forward to India's continued leadership in negotiations under the DDA.India was encouraged to continue economic reform but it was also important to address challenges
such as the use of anti-dumping and safeguard measures.
106. The representative of  Zimbabwe commended India's liberalization policies, and its high
annual economic growth.  In the framework of bilateral agreements, Zimbabwe had benefited from
training, technical assistance, and investment and joint ventures initiatives, and looked forward todeepening its economic relations with India.  Zimbabwe sought India's view on possible reasons for
the low level of FDI and hoped that India would be given the necessary support and flexibility to
achieve its objectives.
107. The representative of Morocco noted that in the context of multilateral negotiations his
country shared common preoccupations with India on reform of special and differential treatment,
sustainable solutions to implementation, and technical assistance and capacity-building for
developing countries.  Infrastructure remained a major obstacle to India's industrial activity and
exports;  although the FDI regime had been liberalized inflows were only 1% of GDP.  The
Secretariat Report noted that some restrictions to FDI remained:  Morocco encouraged India to
simplify its FDI procedures by decentralizing de cision-making.  Morocco was ready to share its
experience with India in the framework of their bilateral cooperation agreements.  Morocco noted that
India's active use of anti-dumping measures could limit inflows of products and invited India to
correct this situation.  Noting that services represented more than 40% of India's GDP, Morocco
congratulated India for opening up its financial services and telecommunications to competition, as
well as for the adoption of its new competition law.
108. The representative of Barbados noted that, as noted by the Secretariat and the Government
Report, despite its constraints India remained co mmitted to integrating fully into the multilateral
trading system.  Barbados appreciated that India had to manage its liberalization process carefully so
as to minimize any economic or social dislocation, and acknowledged India's economic and social
efforts towards the improvement of living standards.
109. The Chairperson invited the Secretariat to present the TPR schedule for the rest of the
year 2002, and for the first part of 2003;  due to previous commitments, the representative of the
Secretariat had to leave the TPR meeting before its end.
110. The Secretariat (Mr. C. Boonekamp) presented the programme of remaining Reviews for
2002, and the programme for the first part of 2003.WT/TPR/M/100
Page 27
V. REPLIES BY THE REPRESENTATIVE OF INDIA AND ADDITIONAL
COMMENTS
111. The Chairperson announced that, upon the request of several delegations, the informal session
on derestriction of TPRB documents would take place at a later date.  In the meantime, she would
continue to hold informal consultations on this issue.
112. The Chairperson invited the representative of India to focus his responses on three main
themes:  (i) economic environment;  (ii) trade policies and measures;  and (iii) sectoral policies andmeasures.
(i) Economic environment
113. The representaive of India stated that his delegation was encouraged by the many positive
remarks from delegations, and the understanding shown for the inevitable difficulties India faced in
meeting the challenges.  India had taken note of certain concerns, and undertook to provide moredetailed written replies at a later stage for some questions.  India also asked the Chairperson for
flexibility to make changes or corrections to its text within the next few weeks.
114. To meet growth targets of 8% of GDP for the period 2002-07, India felt that given an
incremental capital output ratio of around 4.8, this growth rate would be achieved through gross
domestic investment of 32.6% of GDP.  With an assumption of external capital flows at 2.8% ofGDP, domestic savings needed to be raised to 29.8% of GDP for financing this investment.  This
would be achieved through household savings at 19.4%, public sector savings at 4.6%, and private
corporate savings at 5.8% of GDP.  At the macro level, acceleration of growth would be achieved
through a combination of increase in the rate of domestic capital formation, and in greater efficiency
of capital.  High growth in the medium term was expected to double per capita income over the next
ten years, and to reduce poverty ratios significantly.
115. Regarding tax reform, and the prospect of raising direct tax revenue to 10% of GDP, from
3.4% in 2001, direct taxes had increased over the last decade from 1.9% to 3.4% of GDP;  their share
in gross tax revenues had increased from 19% to 36% over the same period.  The main potential for
improvement in the tax-GDP ratio, therefore, was in direct taxes, particularly personal and corporate
income tax.  This would be done by widening the tax base, removing exemptions, and improving tax
compliance, through modernization of tax administration.  Doubts had been expressed, about India'sability to reduce peak tariffs to 20% within three years, given fiscal difficulties, and the need to
augment revenues.  Trade liberalization and lower customs duties would not adversely affect revenue
realization as these were ad valorem  duties and would be bouyant with anticipated expansion of trade,
and the future trend in international prices.  Besides, the Government wanted to emphasize the growth
of direct and service taxes.  Reduction and rationalization of duties and taxes and better taxadministration were likely to enhance tax buoyancy and compliance.
116. The Centre's fiscal deficit, (excluding States' share of small savings collections), which was
5.1% of GDP in 1998/99 and 5.7% in 2000/01 and 2001/02, was estimated at 5.3 % in 2002/03.
Successive budgets in recent years had announced a series of measures towards fiscal consolidation,
including:  (i) zero-based and performance budgeting;  (ii) rationalization and reduction of subsidies;(iii) review of staffing norms, and downsizing the go vernment;  (iv) reduction of administered interest
rates for, inter alia , provident funds and small savings;  (v) linking additional plan allocation to
realization of disinvestment proceeds;  (vi) utilizing a part of disinvestment proceeds to prepay more
expensive external debt;  (vii) deepening tax reforms to enhance the tax base, through an increased
number of assessees, more goods and services under the tax net, and reduction in tax exemptions.Major subsidies were 1.2% of GDP as in the Budgets of 1998/99 and 1999/00, and budgeted at 1.5%WT/TPR/M/100
Page 28
in 2002/03.  The Budget had emphasized a reduction in subsidies over the next three to five years.
Efforts were also being made to reduce off-budget s ubsidies, including for power, transport, and urban
amenities by increasing user charges for these services.
117. In view of the continuing fiscal stress on the economy, and the need to contain the fiscal
deficit within reasonable limits, and based on the recommendations of a committee set up by the
Ministry of Finance in 2000, a Fiscal Responsibility and Budget Bill had been introduced in
Parliament in December 2001.  It provided for a legal and institutional framework to eliminate therevenue deficit, reduce the fiscal deficit, contain the growth of public debt, and stabilize debt as a
proportion of GDP within a timeframe.  The proposed  law obliged the Government to strengthen the
institutional framework for conducting a prudent and accountable fiscal policy, and for promoting
greater macroeconomic stability.  The Bill was presently being considered by the Standing Committee
on Finance.
118. Concern had been expressed that despite significant liberalization of foreign investment
policies, and fiscal and other incentives for devel opment of industry and infrastructure, FDI inflows
remained low.  Although FDI inflows had shown an increasing trend in recent years, these remained
far below India's potential.  The Government was working to improve procedures and facilitation at
all levels.  However, for a country of India's size, FDI could not be expected to be the maindeterminant of growth.  Major resources had to be  generated domestically to sustain higher growth.
Projections in the 10
th Plan suggested an inflow of foreign capital of only 2.5% to 2.8% of GDP out of
gross domestic investment of 32.6% of GDP.
119. On losses in State Electricity Boards (SEBs), steps had been taken to deal with the problems
of theft, and to restructure them.  Several states had enacted anti-theft laws.  The Electricity Bill of
2001, which had been introduced in Parliament in August 2001, sought to make penal provisions
more stringent regarding theft of electricity.  The real problem of management, and the challenge ofreforms lay in the distribution of electricity.  Distribution, and therefore the responsibility for reforms,
was the responsibility of the State Governments.  Several States had passed Reform Laws and
unbundled and corporatized their SEBs.  In Orissa and Delhi electricity distribution had been
privatized.  The Electricity Bill 2001 had an enabling provision for unbundling of SEBs, although the
Government of India did not make unbundling mandatory.  Adequate flexibility had been given to theStates to undertake reforms by adopting the model that  best suited them, including continuing with the
SEBs if they so desired.
120. Concerns had been raised about the proble m of non-performing adva nces (NPAs) in the
banking sector, and interest rates pushed up by priority-sector lending requirements.  Concerted
efforts had been made by the Government and the Reserve Bank of India to ensure that banks tookeffective measures to reduce NPAs.  Preventive measures included legal reforms, risk-management
guidelines for banks, emphasis on credit information sharing, denial of finance to defaulters, and
action against wilful defaulters.  The remedial measures were the setting up of a pilot asset
reconstruction company (ARC) and a compromise settlement system.  The ratio of gross NPAs to
gross advances for all scheduled commercial banks had declined from 15.73% in March 1997 to10.50% in March 2002.  For public sector banks, which accounted for over 80% of the assets of the
banking system, this ratio in March 2002 was 11.79%, while the ratio of net NPAs to net advances
was 5.8% .  As the level of NPAs had come down, they did not have a perceptible impact on bank
lending rates at present.
121. The discussant stated that India's targets in some sectors appeared to be extremely ambitious,
in particular for tax reform.  She also noted that the strategy chosen by India could be affected by
external shocks, and hoped that India's reforms woul d help in realizing the potential to attract more
FDI.WT/TPR/M/100
Page 29
(ii) Trade policies and measures
122. A basic issue that had been raised concerned India's tariffs and tariff structure.  The general
peak import duty rate had been reduced from 50% in 1995/96 to 30% in the current Budget, and the
dispersal of rates was also reduced considerably from 11 major rates in  1995/96 to four.  It was also
India's view that a simple or weighted average of import duties alone would not present a correct
picture.  The actual rate of collection (duties collected over value of imports) might be better:  this
was 31% in 1996/97, and down to 21% in 2000/01, and should fall further in 2002 following the 5%reduction in the peak tariff.  India had drawn attention to the 2002 Budget speech, which set the road
map for moving towards a more simplified and reduced duty structure for non-agricultural products
by 2004/05, of 10% for raw materials, intermediates, and components, and 20% for finished goods.  It
needed to be recognized that these were very substantial moves for a country that had come out of a
QR regime only in 2001.
123. A number of delegations had also raised the issue of tariff exemptions and had inferred that
India's system was not transparent.  All notifications were available on the website of the Central
Board of Excise and Customs.  Al so, out of 101 notifications, 20 related to international and bilateral
agreements;  49 to export related schemes;  three to exemptions for IT related commitments;  one for
textiles agreement commitments;  nine for import of goods of Indian origin;  and 18 for donations,and relief work.  One notification had 415 entries.  Thus, quite a few were not really product-specific
exemptions;  several were only to fix the effective level of tariff for particular products.  This was
because the six-digit classification covered groups of products.  A lower rate of tariff could only be
fixed, through an exemption.  If India had an eigh t-digit classification code in the Customs Tariff,
such exigencies would have been taken care of by the tariff itself:  India was in fact preparing to
introduce eight-digit classification in this financial year.
124. India saw the issue of the gap between applied and bound rates very positively.  If the gap
was high it was because India was able to make do with much lower applied tariff rates.  At the same
time, when required, the flexibility provided by the bound rates had been used, particularly on
agricultural products, after the removal of QRs.  The criteria used in determining tariff rates sought a
balance between many factors, including the need for a phased reduction in duty as part of fiscal
reform, the level of protection needed by the domestic industry, and the needs of the user industry orthe consumers.  A reduction in bound rates was a matter for the on-going negotiations on market
access, where India would need to keep in view its various domestic imperatives, including
developmental, fiscal, and other needs, as well as the extent to which its trading partners committed
themselves to reducing export subsidies and domestic support.  Full consideration of these needs and
imperatives would be expected during the negotiations.
125. There was also confusion about the role of additional duties (ADs) and special additional
duties (SADs).  ADs were in lieu of the excise duty levied on domestically manufactured products,
and should not be misconstrued, they were in lieu of an internal tax;  here again there was steady
progress towards a simple, stable single-rated, ad valorem  duty-based structure for central excise at
16%.  Similarly, the SAD, which was 4%, was in lieu of sales tax and other taxes levied on domesticproducts.  These did not give any additional protection to domestic industry either;  in fact, in certain
cases, domestic products were subject to many more local and other taxes, which imports escaped.
126. India's customs duties on wines and spirits had been brought into line with its bound rates.
The ADs imposed took account of domestic excise duties charged in different States.  These, at 75%
or 50%, were well below the highest excise rates charged in certain States, which were as high as144%.  India had removed all import restrictions maintained on balance-of-payments grounds.  The
special import licencing (SIL) scheme, had also been discontinued from 1 April 2001, and no SIL had
been issued since then.  Import licencing was applicable only for products restricted underWT/TPR/M/100
Page 30
Articles XX and XXI of the GATT.  This list was be ing reviewed continuously.  Canada had said that
it was assessing the impact of India's SPS measures for animal health.  In this context, imports of meatand poultry products would be subject to manufacture, slaughter, packing, labelling and quality
conditions, as laid down in the Meat Food Products Order, 1973, which were already applicable for
domestic products.
127. There were no minimum import prices for items like marble blocks or ceramic tiles, as
indicated in some questions.  While the Government had withdrawn minimum import prices for primesteel items from 1 January 2000, the issue was still sub judice.  Entry through certain ports for a few
products had been introduced for testing and other facilities that were required to be put in place.
However, the attempt was to ensure, within India's constraints, that trade was not unduly disrupted.
As an illustration, natural rubber, which was main ly imported from South-East Asia, would enter by
two major ports in Eastern India.  Cars, new or second-hand, could already be imported freely.However, importers had to comply with the requirements of the Central Motor Vehicles Act, 1988
and Central Motor Vehicles Rules, 1989, which were already applicable to domestic producers.
Second-hand cars over three-years old, were not allowed because of non-availability of spare parts,
and lack of service chains, which jeopardized cons umer and road safety.  Imports of second-hand cars
was allowed only through Mumbai port for proper testing and certification, as the testing facilitieswere located near Mumbai port.  Imports of second-hand capital goods under ten-years old, were
allowed;  however, imports of these g oods over ten-years old needed a licence.
128. In response to questions from various delegations the representative stated that fish products
could be imported freely, and the MFN tariff rate had been reduced to 30%.  However, imports of live
fish were restricted.  Both buses and cranes could be freely imported, but had to comply with the
Motor Vehicle Rules.  The customs duty on hides was 0%, wool tops 20% and wines 100%.  The
import of new motor-cycles in completely built-up form was allowed at 60% customs duty, whereascomponents faced a 30% duty.  Similarly, tariffs on household appliances, like refrigerators and
microwave-ovens were 30%.  All these details were available on the Central Board of Excise and
Customs website.
129. Quantitative restrictions had been removed progressively.  However, India had been
increasingly facing the problem of dumping by foreign exporters.  The process of liberalization wouldbe meaningful only if there was fair trade and a level playing field between imported and domestic
products.  India unfortunately faced this problem at a time when its industry was adjusting to a new
QR-free environment, which made it vulnerable.  When the domestic industry provided full
documentation on dumping, injury, and causation, the anti-dumping authorities had to initiate and
conduct investigations in accordance with the prescribed procedure.  India's anti-dumping rules werefully in accordance with the ADA, with provisions for appeal.  Some complainants had also gone to
the Supreme Court.  The actual trade affected by these measures was not very significant:  the
background, size and scope of the matter therefore, had, to be seen in the right perspective.  India
shared Members' concerns regarding the systemic threat to the multilateral trading system arising
from abuse of trade contingency measures.  India was equally concerned about the consistency ofmeasures taken to comply with DSB recommendations, and rulings in disputes on contingency
measures.
130. Contingency measures on developing country exports were not disproportionately higher in
developing countries than in developed countries.  Operationalizing special and differential treatment
provisions for developing countries would ameliorate, to a certain extent, the difficulties of exportingto developed countries.  This was particularly true for countervailing measures, wherein about 70% of
the measures against developing countries had been resorted to by developed countries.
Anti-dumping duties had been withdrawn on compound rubber from 31 May 2002.WT/TPR/M/100
Page 31
131. Labelling and standards, had been dealt with in the introductory statement.  To harmonize
standards, India was always willing to enter into  mutual recognition agreements with its trading
partners, in accordance with Article 4 of the SPS Agreement.
132. Small-scale industries were very important in a large country like India, particularly from the
socio-economic point of view.  They were major employers situated in rural or semi-urban areas.
Ensuring therefore, the interests of stake-holders, the Government was de-reserving items for the
exclusive manufacture by small-scale industries (SSIs).  As recently as May 2002, the Governmenthad de-reserved 51 out of 799 items;  earlier woven garments were dereserved.  India was reflecting
on the WTO-compatibility of any subsidy scheme for SSIs as well as its new auto policy.  Exports
were not subject to quantitative and other restrictions.
133. Minimum export prices (MEP) had been phased out.  However, exports of onions were
allowed through designated state trading enterprises (STEs), and these STEs prescribed MEPs foronions.  Export restrictions on hides and skins had also been removed;  they were subject to export
taxes, which were WTO compatible.  India had notified the subsidies that it regarded as actionable.
Export promotion schemes, which were in the form of duty drawback schemes, were permitted under
the Agreement on Subsidies and Countervailing Measures.  It had been stated that India's  export
regime was complex and that to counter the anti-export bias, several schemes allowed importers tariffexemptions on inputs.  He pointed out that India merely provided exemption/remission of indirect
taxes, paid on inputs required for export products, in accordance with GATT provisions.  Moreover,
SEZ/EPZ/EOU schemes simply allowed duty-free inputs for export production without any licencing,
in a simplified manner, as these were customs bonded enclaves.  Detailed responses had been
provided on the sale of di-ammonium phosphate ( DAP), and other complex fertilizers to farmers,
which were provided at an affordable cost as the majority of the farmers were resource poor.  India's
customs valuation procedures were in conform ity with the WTO Agreement on Customs Valuation
and Article VII of the GATT 1994.
134. The new Patents Bill had just been passed by Parliament, and was expected to be enacted very
soon.  India was also trying to modernize its patent  offices, including computerization of operations,
re-engineering of work procedures, human resource development, infrastructural development, and
clearance of the backlog of pending applications.  Two modernized offices in Delhi and Chennai hadbeen made operational in 2001, while work was under way in Mumbai and Calcutta.  The issue of the
backlog of pending patent applications was also being addressed through improved productivity and
induction of additional examiners.  As for copyrights, State Governments had designated nodal
officers to coordinate between copyright industry organizations and the enforcement agencies.
Copyright-enforcement or special cells, in the crim e branch, had already been set up in 19 State/Union
Territories exclusively to monitor copyright infrin gement cases.  The Government, in cooperation
with copyright organizations and educational institutions, regularly organized seminars and
workshops to sensitise people about copyrights.  India's Competition Bill was now before the
Standing Committee of Parliament.
135. The discussant noted that tariff exemptions and their complexity had a negative effect on
trade facilitation particularly for countries seeking to export to India.  Although from India's
perspective the gap between applied and bound rates was positive, this was not the case for companies
seeking market access in India, as the gap introduced a level of uncertainty.  She took note of India's
statement that it would reply in writing at a later stage to her question on bindings.  While
acknowledging the right of Members to resort to anti-dumping measures, there was a danger that theynullified the benefits of liberalization.  She aske d why India's use of AD measures was higher than
that of other countries with a similar share of trade.  She acknowledged India's legislation on
intellectual property rights, and asked if rigorous benchmarks could be set on enforcement.WT/TPR/M/100
Page 32
136. The representative of the United States noted that in order for India to reach its objectives,
further domestic reforms were needed, together with a more attractive environment for investment.  If
India aspired to the East-Asian tigers' rates of econo mic growth, it needed to have equivalent tariffs.
The United States asked whether India believed that the basic rates of 10% and 20% were sufficient to
serve its aspirations.  It was worth noting that while respecting bound rates was enough within the
WTO legal framework, tariff bindings not only benefited trading partners, and ensured security and
predictability of the trading system, but they al so protected governments from pressure by domestic
industry and interest groups.
(iii) Sectoral policies
137. On the question of India's competitiveness in th e textiles sector, the representative said that
the industry remained competitive because of the availability of raw material at international prices;
skilled manpower;  a well diversified industrial base;  comprehensive testing facilities to meet theecological standards of the major consuming countries;  continuous modernization and technological
upgrading;  fiscal duty restructuring to achieve growth and maximum value addition;  foreign direct
investment;  SSI de-reservation of woven readymade garments;  and further SSI de-reservation of
knitwear;  and reduction in transaction costs and time through procedural simplification.  India's
historical growth in cotton textile exports had been significant compared with most competitors, andIndia's exports were well dispersed geographically.
138. In recent years, changes in the external envir onment, such as the emergence of trade blocks,
new retail formats, and enforcement of new service standards had provided fresh challenges to the
growth of exports of textiles and clothing.  Thes e factors had put enormous pressure on trade volumes
and prices.  In addition, erosion in prices of raw materials, and a rise in conversion costs had also had
some impact on quota utilization patterns in certain categories in the short term.  At the same time, the
cyclical pattern of demand and supply had led to a decline in utilization of some categories, and acorresponding increase in other under-utilized categories.  Integration by major importing countries
during the first three stages of the ATC failed to meet its central objective, that of phasing-out of
quotas.  In the first three stages, only a few quotas had been phased out, and the bulk of quotas would
be phased out at the end of the transition period on 31 December 2004.  According to a recent study,
as a result of the quotas, the cost of imports into the United States from India was 9.8% higher fortextiles, and 34.2% higher for clothing.  For the European Union these costs were 12% higher for
textiles, and 15% higher for clothing.  India's textiles products, particularly cotton based, had been the
subject of repeated anti-dumping actions in some developed-country markets.  This had had a
debilitating effect on exports of cotton textiles, in which India enjoyed a natural comparative
advantage.  Textile tariffs in major importing countri es were much higher than industrial tariffs.  U.S.
tariffs on clothing were almost eight times the overall average, and brought in nearly half of its annual
tariff revenue.  Furthermore, tariffs within these categories were usually higher on cheap goods
imported from developing countries, i.e. U.S. tariffs were 19.7% for cotton shirts, and 32% for
man-made fibre shirts.  With regard to India's reliance on few export markets, India's textiles were
exported to over 100 countries, and efforts were made to diversify the product portfolio and markets,including through participation in exhibitions/fairs, and buyer-seller meets.  The Association of
Exporters also promoted products in non-quota markets.
139. India had been progressively removing distortions in agriculture.  Storage controls for food
grains and other essential commodities were being phased out providing opportunities for
modernizing the food-grain storage sector and leading to further investment.  State restrictions onmovement of food grains had been removed recently enabling deficit States to obtain food grains at
reasonable prices.WT/TPR/M/100
Page 33
140. A price support system existed for certain sensitive agricultural products, and procurement
was arranged when prices fell below a reference minimum support price.  The food grains thusprocured were sold through the public distribution system to families below the poverty line, and were
used to generate employment, and to create physical infrastructure in the rural areas.  Novel schemes
had been established to use the food grains to set up grain banks to be used by families with
inadequate income.  These measures would certainl y bring down the food grain stocks built up in the
country.  In addition, there were schemes to divert areas of cultivation from rice and wheat to othercrops.  Indian agriculture was still vulnerable to  the vagaries of nature and pest and disease.
141. A number of export restrictions that were in place until recently had failed to service markets
and had created uncertainty for the farmers choosing to produce those crops.  This year, all
restrictions on agricultural exports had been removed, except on onions.  Export duties were in the
form of a cess, and were used for research and development (R&D) in that specific sector.  Inaddition, quantitative restrictions on imports of agricultural commodities had been removed in 2001,
enabling the alignment of domestic and interna tional prices.  The Government's expenditure in
agriculture related to R&D, extension, infrastructure for irrigation, cold storage, and other related
green box measures.  For certain perishable products, it was necessary to meet the costs of air freight.
Only when such exports aggregated to economic levels could freight charges be comparable tointernational levels, and until then, it might be necessary to meet a part of the freight-related expenses.
Efforts were being made to set up  futures trading.  To begin with, futures market had been set up for
pepper.  Some states had started setting up village-level user charges collection and management
committees for irrigation. 
142. The services sector accounted for around 50% of GDP, and its improvement would
significantly enhance the efficiency of the primary and secondary sectors.  India had emphasized  the
development of infrastructure services.  Telecommunications, banking, insurance, shipping, roads,and ports had been identified as sectors in which in vestment would yield significant results.  India had
scheduled commitments in 33 sub-sectors compared with an average of 23 sub-sectors by the
developing countries in the Uruguay Round.  Subse quently, India had also autonomously liberalized
many sectors, including telecommunications and insurance.
143. Financial sector reforms had been under way since the early 1990s.  Reforms in banking and
other financial services had aimed to improve efficiency by adopting best global practices.  The
establishment of new private sector banks and the entry of foreign banks into the country had
strengthened the sector.  Transparency in the banking sector was increased through proper asset
classification, capital adequacy norms, provis ioning and disclosure.  This also enhanced
accountability and public credibility.  Capital adequacy norms and exposure limits prescribed forbanks were in line with the Basel Committee's standa rds.  The recent Budget provided flexibility to
foreign banks to operate either through branches of their overseas parents or to function as
incorporated units in India.
144. Significant changes had taken place in the telecommunications sector.  Recognizing the need
to integrate voice, data, and video, the Convergence Bill had been introduced in Parliament.  Ahead ofits GATS commitments by two years, international long-distance telephony had been opened to
competition, by terminating the monopoly of Videsh  Sanchar Nigam Limited.  In addition, national
long-distance had also been thrown open to competi tion, enabling private companies to compete with
the government-owned company Bharat Sanchar Ni gam Limited.  In a significant move, hand-held
wireless in local loop systems had been permitted within local areas to provide affordablecommunication.  These steps were much ahead of India's GATS commitments in the
telecommunications sector, and would enable faster economic growth.WT/TPR/M/100
Page 34
145. To attract investment, changes in the transportation sector had been undertaken.  The Port
Trust Act had been amended to allow joint ventures between Indian and foreign ports.  Ports werealso being corporatized in a phased manner.  In the existing ports, the construction and operation of
berths was also being privatized.  The railways had taken steps to encourage private participation.
The private sector had been involved in setting up terminals, and providing connectivity to the ports;
certain services, such as catering, were being privatized.  Technology was being increasingly used to
enhance efficiency in the postal services.  In addition, new products, like e-post had been introducedin some States, which would combine e-mail and traditional postal operations in rural areas.
146. On the impact of amendments to the Patents Act on the pharmaceutical sector as well as the
impact on public health and access to drugs following the adoption of new legislation, experience in
other countries showed that stronger patents led to an increase in pharmaceutical prices.  This would
certainly affect access to medicines for poorer sections of society.  On the other hand, a new patentregime would lead to growth in state-of-the-art technology.  The Indian pharmaceutical industry was
expected to move into innovative R&D.
147. The discussant thanked India for its responses on competitiveness in textiles and clothing,
grains stocks, and liberalization of services, and for discussing the impact of amendments to the
Patents Act on India's domestic competitiveness, and on public health and access to medicines.
148. The representative of the United States noted from India's written answers that it applied high
duties on edible oils, with bindings up to 300%.  The United States sought clarification in this regard.
Referring to India's safeguard investigation currently under way on edible oils, he asked how further
raising the existing tariff would protect the domestic industry.  The United States asked whether
India's safeguard tariffs could be imposed at a level higher than its bound rates.WT/TPR/M/100
Page 35
VI. CONCLUDING REMARKS BY THE CHAIRPERSON
149. This meeting has led to a much better understanding of India's trade policies.  The outcome
has been a very successful third Review of India's trade policies, practices and measures, due mainly
to the active involvement of the Indian delegation
150. Members commended India for its strong economic performance over the past decade, with
growth at an average 6% a year and a reduction in poverty.  They noted that this resulted, in great
part, from continued economic reforms, including trade liberalization, lower government involvementin the economy and liberalization of key services sectors.  Trade reforms had concentrated on tariff
reform and the removal of quantitative restrictions on imports.
151. Members noted that India was targeting even higher economic growth, particularly to reduce
poverty further.  This was to be achieved by stepping up reforms, including trade measures, especially
to reduce the anti-export bias in the import regime.  Several Members also remarked on theimportance of investment, particularly for infrastructure, which needed urgent attention.  The FDI
regime had been significantly liberalized, but FDI inflows had not increased in parallel.  Moreover,
the high fiscal deficit constrained public investment in infrastructure.  The deficit also had
implications for further reform of the tariff, which remained a major source of tax revenue;  tariff
reform needed to be accompanied by significant reform of the internal tax system, which India wasstriving to do.
152. India was commended for its initiative to simplify the tariff, but Members voiced concern
over the persistence of high rates, escalation, complexity (including exemptions), and the gap between
applied and bound rates.  Details were requested on plans to reduce the tariff to two rates (10% and
20%).  The imposition of additional and special additional duties to countervail indirect taxes
remained a concern among Members.
153. Members were worried about India's increased use of contingency measures, notably anti-
dumping.  Some Members also worried that the removal of QRs had been followed by an increase in
other measures such as strict labelling, certification, and SPS requirements.  India was commended for
its efforts to enforce protection of intellectual property rights, both through the adoption of new
legislation and through education campaigns.  Members stressed, however, that further efforts were
required in this regard, especially in vi ew of India's need to attract more FDI.
154. Members noted the importance of the agriculture sector in India and stressed the need to
further liberalize it in order to develop its full potential.  Concerns were expressed over subsidies for
agricultural products and inputs, which have contributed to large grain stocks and to export
restrictions on agricultural goods.  Some Members also urged liberalization of the Indian textile
sector, noting that protection through high tariffs and small-sector reservations had hindered itscompetitiveness.
155. India has made significant progress in reforming services sectors, notably
telecommunications, banking, and insurance.  Some Members raised queries in relation to banking
reform, including national treatment.  Questions were also raised about market access in other
services such as telecommunications, audiovisual and software services.  Members pointed to thesuccess of India's software sector as being indicative of its ability to compete globally.
156. Members also sought clarification on several specific issues including:
- procedures to review and reduce over-regulation in the economy;
- customs procedures and valuation;WT/TPR/M/100
Page 36
- import restrictions and licensing;
- the role of state trading companies;
- export-processing zones;
- performance requirements in the automobile sector;
- government ownership of, and involvement in, financial services;
- policy in transportation services, and land ownership, reforms in the electricity sector
and public postal services.
157. Members expressed their appreciation for the oral and written responses and explanations
provided by the Indian delegation;  they looked  forward to receiving answers on still outstanding
questions.
158. This brings us to the conclusion of our Review of India.  The large number of advance
questions, numerous interventions (some 30) and the high level of attendance indicate the importantrole that India plays at the WTO.  India was commended for its reform process, including trade
liberalization, and simplification of the trade and investment regime.  However, I think we all agree
that India needs to do more if growth targets are to be  met and a serious dent is to be made in the still
high rate of poverty.  In this regard, Members gave India their full support for its efforts to reform the
economy.  Many Members added that these efforts would be greatly enhanced by steps on the part ofIndia's trading partners to reduce, if not remove, their impediments to India's exports, especially in the
context of new negotiations in line with the Doha Development Agenda (DDA).  India has clearly
stated its support for the WTO and the DDA but considers that if further progress is to be made, the
onus remains on the developed countries to keep the promises made in Doha.  This view was
endorsed by many other Members, who look to India for leadership in these negotiations.
__________