G/STR/Q1/IND/14  
 
1 November  2016 
(16-5988) Page: 1/3 
Working Party on State Trading Enterprises  Origina l: English  
 
 STATE TRADING  
REPLIES TO QUESTIONS1 POSED BY THE  EUROPEAN UNION ON TH E TAMIL  NADU  
STATE MARKETING CORP ORATION LIMITED (TAS MAC)  
The following communication, dated 21 October 2016, is being circulated at the request of the 
Delegation of India . 
 
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We thank the EU for the follow up questions posed on Tamil Nadu State Marketing Corporation 
Limited (TASMAC). The EU had sought questions on TASMAC earlier to which India had responded 
to on 22 April 2016 in G/STR/Q1/IND/10. The EU has now sought addi tional clarifications on the 
status of TASMAC.  
**** 
Questions  
 
The EU would appreciate to receive additional clarifications in order to assess whether 
TASMAC would meet the criteria for being notified as a STE under the provisions of 
Article XVII of the GA TT and the related understanding and illustrative list.  
 
In this respect, the EU has assessed whether TASMAC fulfils the following criteria: (i) a 
governmental or non -governmental entity; (ii) the granting to the enterprise of 
exclusive or special rights o r privileges; and (iii) a resulting influence, through the 
enterprise's purchases or sales, on the level or direction of imports or exports.  
 
(i) A governmental or non -governmental entity  
 
India, in its replies states that TASMAC is not a STE recognised un der the Foreign Trade 
Policy of India. In the EU's view, this is neither relevant nor sufficient in this context.  
 
According to the available information, TASMAC f unctions under the administrative 
control of the Prohibition and Excise Department of Tamil N adu, which is a branch of the 
Ministry for Electricity, Prohibition and Excise of the Government of Tamil Nadu. I n a 
Notice Inviting offers for registration of Imported Foreign Liquor brands for sale to 
TASMAC , the Government of Tamil Nadu clearly defines TASMAC as a "Government of 
Tamil Nadu undertaking" and states that:  
 
"Tamil Nadu State Marketing Corporation Limited is a Company wholly owned 
by the State of Tamil Nadu having exclusive privilege of conducting 
wholesale and retail trade in Indian Made For eign Spirits (IMFS) and Beer in 
the whole State. It is also dealing in Imported Foreign Liquor (IFL) brands."  
Therefore, in the EU's view, TASMAC should be considered as a governmental entity.  
 
                                                
1 G/STR/Q1/IND/13.  G/STR/Q1/I ND/14  
 
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  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 that would contradict our assessment?  
(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 privilege of Retail Vending of Indian Made Foreign 
Liquor and the retail sale of liquor is carried on by TASMAC from 29.11.200 3." 
Therefore, the EU does believe that TASMAC has been granted special privileges.  
 
EU question No . 2: On the basis of the above explanations, could India clarify whether it 
agrees with our conclusions that TASMAC has been granted exclusive or special rig hts 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 fr om the Prohibition and Excise Department (Demand No. 37) 
of the Government of Tamil Nadu, point 5, it is stated that:  
 
"TASMAC is also 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 the special fee, 
58%  VAT is also levied on the sale of foreign liquor. (…)  Further the imported 
foreign liquor is also direct ly 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 (IFL2) brands ." 
 
Therefore, t he EU considers that TASMAC fully fulfils the above criteria as it is marketing 
imported alcoholic beverages, it is the canalising agency to regulate the i mport 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 India clarify whether it 
agrees with our conclusions that TASMAC has an influence, through its purchases or 
sales, on the le vel or direction of imports or exports? If not, could India submit a 
detailed reasoning that would contradict our assessment?  
 
Importation 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 that TASMAC is not a STE recognized under 
the Foreign Trade Policy (FTP) as all items under chapter 22 (comprising of Beverag es, 
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 
                                                
2 Liquor imported from foreign countries as well as other States.  G/STR/Q1/IND/14  
 
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  (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?  
 
Replies  
India would firstly like to re iterate its position on TASMAC.  
In India 's view TASMAC is not a State Trading Enterprise recognised under the Foreign Trade 
Policy (FTP) of India. India 's FTP is available at http://www.dgft.gov.in . Under the FTP, State 
Trading Enterprises (STEs) are governmental and non -governmental enterprises, including 
marketing boards, which deal with goods for export and/or import. Any good, import or export of 
which is governed through exclusive or special privilege granted to STE, may be imported or 
exported by the concerned STE as per conditions specified in the Indian Trade Classification 
(Harmonised System). The list of STEs notified by the Director General of For eign Trade is in 
Appendix 2 of the FTP. TASMAC is not an STE under this Appendix.  
Further, as per the FTP, Exports and Imports shall be 'free' except when regulated by way of 
'prohibition ', 'restriction ' or 'exclusive trading through State Trading Enterpr ise' as laid down in the 
ITC (HS) of Exports and Imports. The list of 'prohibited ', 'restricted ' and 'STE' items can be also be 
viewed by clicking on downloads on the above mentioned website. Perusal of the item wise import 
policy, as contained in the ITC (HS) reveals that all items under Chapter 22 (comprising of 
Beverages, Spirits and Vinegar) are under the 'free' category. None of the HS lines under 
Chapter  22 are under STE category. Therefore, there are no STEs designated for its import. 
Regarding the E U question on what are the conditions of importation of items under the 
HS Chapter 22, the conditions of importation of all items including items under the HS Chapter 22 
are found on the website at http://dgft.gov.in/ . 
The EU in its additional questions has referred to a number of documents and raised the issue of 
the status of TASMAC. TASMAC is a provincial level entity. We are consulting the relevant entity 
and different levels of Government, and seeking more informatio n so that we can appropriately 
respond to the issues raised by the EU. The nature of questions require co -ordination, information 
gathering and response from different levels of agencies and India would require more time to 
respond in this regard.  
The addi tional questions that have been sought in September by the EU have been conveyed to 
Capital. A response is still awaited in this regard.  
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