G/STR/Q1/IND/13  
 
12 September 2016 
(16-4804) Page: 1/2 
Working Party on State Trading Enterprises  Original: Eng lish 
 
STATE TRADING  
QUESTIONS POSED BY T HE EUROPEAN UNION ON TH E TAMIL  NADU  
STATE MARKETING CORP ORATION LIMITED (TAS MAC)  
The following communication, dated 12 August 2016, is being circulated at the request of the 
Delegation of the European Union . 
 
_____________ __ 
 
 
In April 2015, the EU submitted written questions to India (G/STR/Q1/IND/6) seeking clarifications 
on the legal status and activities of the Tamil Nadu Marketing Corporation Limited (TASMAC) to 
which India replied on 25 April 2016 (G/STR/Q1/IND/10). O n 9 June 2016, at the last meeting of 
the WP on STEs, we raised orally further questions to India. On that occasion, India requested the 
EU to provide the questions in writing.  
 
**** 
 
The EU would appreciate to receive additional clarifications in order t o assess whether TASMAC 
would meet the criteria for being notified as a STE under the provisions of Article XVII of the GATT 
and the related under standing and illustrative list.  
 
In this respect, the EU has assessed whether TASMAC fulfils the following cri teria: (i) a 
governmental or non -governmental entity; (ii) the granting to the enterprise of exclusive or 
special rights or privileges; and (iii) a resulting influence, through the enterprise's purchases or 
sales, on the level or direction of imports or ex ports.  
 
(i) A governme ntal or non -governmental entity  
 
India, in its replies states that TASMAC is not a STE recognised under the Foreign Trade Policy of 
India. In the EU's view, this is neither relevant nor sufficient in this context.  
 
According to the av ailable information, TASMAC f unctions under the administrative control of the 
Prohibition and Excise Department of Tamil Nadu, which is a branch of the Ministry for Electricity, 
Prohibition and Excise of the Government of Tamil Nadu. I n a Notice Inviting o ffers for registration 
of Imported Foreign Liquor brands for sale to TASMAC , the Government of Tamil Nadu clearly 
defines TASMAC as a "Government of Tamil Nad u undertaking" and states that:  
 
"Tamil Nadu State Marketing Corporation Limited is a Company whol ly owned by 
the State of Tamil Nadu having exclusive privilege of conducting wholesale and 
retail trade in Indian Made Foreign Spirits (IMFS) and Beer in the whole State. It is 
also dealing in Imported Foreign Liquor (IFL) brands."  
Therefore, in the EU's v iew, TASMAC should be considered as a governmental entity.  
 
EU question No . 1: Considering the above, could India clarify whether it agrees with our conclusion 
in considering TASMAC a governmental entity? If not, could India submit a detailed reasoning tha t 
would contradict our assessment?  
 G/STR/Q1/IND/13  
 
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  (ii) The granting to the enterprise of exclusive or special rights or privileges  
In a Policy Note of 2015 from the Prohibition and Excise Department (Demand No. 37) of the 
Government of Tamil Nadu, point 5, it is stated  that: 
 
"TASMAC has been granted the exclusive privilege of Wholesale of Indian Made 
Foreign Liquor for the whole state of Tamil Nadu (…) and is carrying on the 
Wholesale distribution of liquor from 23.05.1983. (…) TASMAC has been granted the 
exclusive pri vilege of Retail Vending of Indian Made Foreign Liquor and the 
retail sale of liquor  is carried on by TASMAC from 29.11.2003."  
Therefore, the EU does believe that TASMAC has been granted special privileges.  
 
EU question No . 2: On the basis of the above exp lanations, could India clarify whether it agrees 
with our conclusions that TASMAC has been granted exclusive or special rights or privileges? 
If not, could India submit a detailed reasoning that would contradict our assessment?  
 
(iii) A resulting influence , through the enterprise's purchases or sales, on the level or direction of 
imports or exports  
 
In a Policy Note of 2015 from the Prohibition and Excise Department (Demand No. 37) of the 
Government of Tamil Nadu, point 5, it is stated that:  
 
"TASMAC is als o marketing Imported Foreign Liquor, Beer and Wine products . 
(…) TASMAC has been appointed as the canalising agency from 02.03.2012 onwards, 
to regulate the import of foreign liquor  by collecting a service charge of 3% of the 
special fee. In addition to th e special fee, 58% VAT is also levied on the sale of foreign 
liquor. (…)  Further the imported foreign liquor is also directly purchased and 
sold through retail outlets like malls for the domestic market by the Tamil 
Nadu State Marketing Corporation Limited ." 
Moreover, i n the "proceedings of the Commissioner of Prohibition and Excise " dated 02.03.2012, it 
is stated that " TASMAC is also responsible for the import and sale of Imported Foreign Liquor 
(IFL1) brands ." 
 
Therefore, t he EU considers that TASMAC full y fulfils the above criteria as it is marketing imported 
alcoholic beverages, it is the canalising agency to regulate the import of foreign liquor and it is in 
charge of the retail of IFL.  
 
EU question No . 3: On the basis of the above explanations, could I ndia clarify whether it agrees 
with our conclusions that TASMAC has an influence, through its purchases or sales, on the level or 
direction of imports or exports? If not, could India submit a detailed reasoning that would 
contradict our assessment?  
 
Import ation of items under the HS Chapter 22  
 
In addition, the EU would like to receive further clarifications on the conditions of importation of 
items under the HS Chapter 22. Indeed, in its reply provided on 25 April 2016 
(G/STR/Q1/IND/10), India explained th at TASMAC is not a STE recognized under the Foreign 
Trade Policy (FTP) as all items under chapter 22 (comprising of Beverages, spirits and vinegar) are 
under 'free' category i.e. their import is allowed without any licensing conditions and, since none of 
the HS lines under chapter 22 are under STE category, there are no STEs designated for their 
import. However, the provisions included in the Policy Note of 2015 from the Prohibition and Excise 
Department (Demand No. 37) of the Government of Tamil Nadu  seem to contradict with India's 
reply.  
 
EU question No . 4: Could India clarify what are the conditions of importation of items under the HS 
Chapter 22?  
 
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1 Liquor imported from foreign countries as well as other States.