WORLD TRADE  
ORGANIZATION  WT/TPR/M/182 
9 July 2007 
 (07-2906) 
Trade Policy Review Body 
23 and 25 May 2007   
 
  
TRADE POLICY REVIEW 
 
INDIA 
 
Minutes of Meeting
 
 
Chairperson:  H.E. Mr. Vesa Himanen (Finland) 
  
  Page 
 
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 2 
II. OPENING STATEMENT BY THE REPRESENTATIVE OF INDIA 3 
III. STATEMENT BY THE DISCUSSANT 7 
IV. STATEMENTS BY MEMBERS 10 V. REPLIES BY THE REPRESENTATIVE OF INDIA AND ADDITIONAL COMMENTS 20 
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 30 
 
 
Note:   Advance written questions by WTO Me mbers and the replies provided by India are 
reproduced in document WT/TPR/M/182/Ad d.1 and will be available online at 
http://www.wto.org/english/tr atop_e/tpr_e/tp_rep_e.htm.WT/TPR/M/182 
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  I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
1. The fourth Trade Policy Review of India was held on 23 and 25 May 2007.  The Chairperson 
(H.E. Mr. Vesa Himanen) welcomed the Indian delegation, led by Mr. G.K. Pillai (Secretary, 
Department of Commerce) and H.E. Mr. U.S. Bhatia, and the discussant H.E. Mr. Eckart Guth (European Communities).  As usual, the discussant would speak in his personal capacity and not as 
representative of his country.  In accordance with th e established procedures, the discussant had made 
available, in advance, outlines of the main i ssues he intended to raise (document WT/TPR/D/158). 
2. The Chairperson recalled the purpose of the Trad e Policy Reviews and the main elements of 
the procedures of the meeting.  The report by India was contained in document WT/TPR/G/182 and 
that of the WTO Secretariat in WT/TPR/S/182.  As indicated in WT/TPR/6/Rev.1, the Member under 
review should provide written answers, by the be ginning of the review meeting, to questions 
submitted at least two weeks before the meeting.  Questions posed subsequently should be answered, 
to the extent possible, before the start of the second session of the meeting.  Questions left 
unanswered at the end of the second session should be  answered in writing no later than one month 
after the meeting.  Questions by the following de legations had been submitted in writing at least 
two weeks in advance of the meeting and had been tr ansmitted to the delegation of India:  Singapore;  
New Zealand;  Switzerland;  the European Communiti es;  Mexico;  the Separate Customs Territory of 
Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei);  Australia;  Japan;  the United States;  the Republic of Korea;  Colombia;  Brazil;  and Cana da.  Copies of these questions and of the answers 
provided by the delegation of India were available in  the meeting room.  Norway;  Chile;  Argentina;  
Hong Kong, China;  Pakistan;  Th ailand;  the United Arab Emirates ;  and Egypt had submitted written 
questions after the two-week deadline.  These had also  been transmitted to the delegation of India and 
copies, along with the answers provided by the dele gation of India, were available in the meeting 
room.  All advance questions, as well as the res ponses received from the delegation of India, are 
reproduced in WT/TPR/M/182/Add.1. 
3. The Chairperson acknowledged that India's econom ic growth had been impressive during the 
review period (2002-07), averaging over 7% annually , largely due to structural reforms, including 
unilateral trade liberalization and tax reforms.  The overall average applied MFN tariff rate, for 
instance, had fallen from 32.3% in 2001/02 to 15.8% in 2006/07.  In order to sustain high levels of 
economic growth, the Government was encouraging higher export growth and investment, and had 
put in place a complex set of schemes to reduce the anti-export bias of the trade regime for exporters. 
4. As the Indian Government was aiming to ach ieve annual growth of  between 8% and 10% 
over the longer term, a number of challenges need ed to be addressed.  These included infrastructure 
bottlenecks, especially in transport, as well as electri city, where supply continued to be deficient and 
loss-making public sector suppliers remained a drain on public finance.  Deeper reforms were also 
required in agriculture, where, despite increased public sector spending in recent years and reduced 
government controls, further efforts were needed to address the sector's relatively low productivity 
and the problems of marginal farmers.  Struct ural reforms would need to be accompanied by 
appropriate macroeconomic policies.  India's fiscal deficit, although declining, remained significant, 
while public expenditure on infrastructure and hu man capital development was constrained by the 
relatively low level of taxes to GDP as well as by  spending on subsidies.  Hence, continued reform, 
together with greater investment in physical a nd human capital, would assist in generating productive 
employment for new entrants to the labour force.  With one third of the population currently below 
the age of 18, this would help India to reap the "demographic dividend". 
5. The Chairperson also mentioned that, on an ad hoc basis, AITIC had requested to observe the 
Review of the Central African Republic on 11 and 13 June.  As AITIC worked closely with the 
Central African Republic, he had approved this request.  WT/TPR/M/182 
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  II. OPENING STATEMENT BY THE REPRESENTATIVE OF INDIA 
6. The representative of India  emphasized the Indian Government 's strong support for the Trade 
Policy Review process, which was an occasion for in trospection.  India was on the threshold of 
far-reaching reforms that were expected to  fundamentally transform the economy.   
7. India was the largest democracy in the world.  Democracy had taken deep roots in India and 
hence the need for an all-inclusive growth pr ocess had become an absolute imperative.  The 
eradication of poverty, the provision of basic needs fo r all Indians, the development of agriculture and 
rural areas, as well as issues related to health car e, access to employable education, provision of 
adequate infrastructure, and effective governance we re the key issues on India's action agenda.  This 
multi-faceted development process posed a major cha llenge on the Indian polity.   India had a Federal 
polity with the Central Government and the stat e governments having exclusive domain over various 
sectors with certain overlaps.  In the past two decades, attention had also been paid to local 
self-government.  The increased devolution of r esponsibilities to the local levels had increased 
complexities of administration;  on the other hand, it had empowered people at the grass-root level.  
More than a million representatives were elected at the local level, one third were women (by statute).  
This had been changing the entire Indian political, social, and economic fabric.  Democracies worked 
slowly but steadily, and the pace of reforms was th e price paid for inclusive growth.  India had a 
population of 1.1 billion, a quarter of whom were significantly disadvantaged in terms of income, 
assets, education, and access to health  facilities.  The Indian economy had grown at the rate of 5.3% 
in the 1980s;  this had increased to 6.5% in th e 1990s, and over 8% in the last four years.   
8. Agriculture remained the backbone of the rural economy.  Over 81% of India's farmers (over 
127 million cultivators) were small and marginal farmers with holdings of 2 hectares or less.  In addition, there were over 100 million landless agricultu ral labourers.  India had 22% of the world’s 
poor, and rural poverty was far higher than urban pove rty.  The development pattern had left nearly 
60% of the population dependent on agriculture.  Th is vulnerable sector needed special care and 
protection.  The pressure on land needed to be  relieved by providing alternative avenues of 
employment and income, through crop diversificati on, and the development of rural non-farm sector, 
manufacturing, and services.  Horticulture a nd food processing industries were obvious direct 
linkages.  The sector's modernization and transformation would take time.  Nonetheless, transformation would entail absorption of labour in manufacturing and services.  In addition, India's 
domestic reform process would be facilitated if access  to industrial goods and services markets in the 
developed countries could be accelerated.  The de velopment dimension of the Doha Development 
Round gave an immediate and sharp focus to this crying need.     
9. Growth in India had not only sustained itself at a high rate but also had exhibited low 
volatility and strong immunity to ec onomic shocks.  An IMF working paper, "From 'Hindu Growth' to 
Productivity Surge:  The Mystery of the Indian Growth Transition" stated that between 1980 and 
1999, India "outperformed all regions, save East Asia , in terms of average growth, and outperformed 
all regions, including East Asia, in terms of the stability of growth". 
10. Continued and sustained growth of the Indian economy was good not only for India, but also 
for the rest of the world.  The Indian Government considered that, to sustain the economic growth, 
there was a need for continual reform as well as a ma trix of institutions and pu blic policies tailored to 
the new needs of the economy.  Policy reforms had been implemented over the last decade;  and, 
despite changes of Government during the last 15 years, the momentum of economic reforms had not 
abated.  In a vibrant and complex democracy such as  India, the reform process could and would have 
some fits and starts, but the overall directi on of the reforms had always been positive. 
11. India continued to reduce its tariffs and barrier s to foreign trade unilaterally.  The overall 
applied MFN rate had fallen from 32.4% in 2001/02 to 15.8% in 2006/07.  In addition to the tariff WT/TPR/M/182 
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  reductions, another indication for the openness of the Indian economy was that every year imports 
were higher than exports.  In the last four years, Indian exports had grown by more than 20% annually, and its imports by more than 30% annually. 
12. India had made considerable progress in ope ning up the capital account:  100% convertibility 
had been realized for foreign institutional investors.   Indian firms could take up to 300% of their net 
assets out of the country for overseas capital investment.   
13. Infrastructure deficit was the principal cons traint on economic growth.  During the last 
decade, the Indian Government had significantly shifted away from directly producing infrastructure 
goods and services, to providing a sound regulatory and policy framework that would motivate the 
private sector to invest in infrastructure.  Howe ver, despite good progress in telecoms, roads, ports, 
electricity, and aviation, the deficit was still high. 
14. In telecoms, competition was greatly promoted among multiple private telecom companies.  
The total number of telephones increased from 54. 63 million at end-March 2003, to 206.83 million at 
end-March 2007.  The number continued to increas e by 6 million every month, and the Government 
had set a target of having 500 million telephones by  2010.  Small shops offering internet access were 
now spreading all over the country.  A national e-Governance Mission had become operational in 
2006.  All telecom services were opened to interna tional competition, with no limit on the number of 
service providers in national and inte rnational long-distance segments.  The share of the private sector 
in the number of telephones increased from 15% in March 2002, to 65% in December 2006. 
15. In roads, the National Highways Developmen t Project (NHDP) was the largest highway 
project ever undertaken in India.  All sub- projects in NHDP Phase-III to Phase-VII would be 
undertaken by public-private partnership (PPP) on a build-operate-and-transfer (BOT) mode.  Only in 
exceptional cases would private par ticipation not be possible.  
16. In the port sector, 100% FDI was allowed.  Priv ate sector participation (PSP) was enhanced 
by the "landlord port" model, which implied that operational activities of the port were increasingly transferred to the private sector through contracts. 
17. The power sector had been radically restructured  with the enactment of the Electricity Act 
2003, which replaced the legislation of 1910, 1 948, and 1998, and provided a comprehensive 
framework for reforming the sector.  The Electricity Act 2003 established a pro-competitive regulatory framework, whic h permitted the entry of the private sector in generation, trading, and 
distribution of electricity. 
18. In aviation, against the backdrop of the termin ation of the state monopoly over scheduled air 
transport services in 1994, as well as the subsequent reforms to the domestic regulatory environment, 
air transport services blossomed.  Airports were be ing modernized and new greenfield airports were 
under construction.  The establishment of merchant ai rports by the private sector was being explored 
to meet the fast growing demand.  
19. Investment of about US$320 billion would be required in the core infrastructure sectors 
during the 11
th Five Year Plan period (2007-12).  This wa s to be achieved through a combination of 
public investment, PPPs, and exclusive private invest ments, wherever feasible.  India welcomed FDI 
in these core sectors.  
20. Regarding customs clearance for IT prod ucts, electronic commerce/electronic data 
interchange system enabled the filing and tracking of customs documents on a 24/7 basis.  A risk 
management system (RMS) was introduced at important  customs stations.  Facility for e-payment of  WT/TPR/M/182 
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  customs duty was also introduced.  It was expected that by the end of 2007, e-connectivity among all 
major stakeholders in trade, including customs, ports , shipping, airlines, and banks would be realized.  
21. In an attempt to streamline SPS procedures and enforcement, the Food Safety and Standards 
Act was passed by Parliament in August 2006.  Th is Act consolidated 13 laws and established the 
Food Safety and Standards Authority (FSSA).  The regulations and rules to implement the Act were 
being formulated. 
22. The corporate governance system had been m odified.  The Government was considering 
comprehensive revision of the Companies Act 1956,  in order to embrace the best practices in 
corporate governance as revealed by international experience. The Ministry of Company Affairs' 
e-governance project (MCA-21), envisaged easy and secured online access to all the services being 
provided by the Registrars of Companies.  Electronic filing of documents by companies was made 
mandatory from 16 September 2006.  From 1 November 2006, directors of companies, or potential directors, were required to obtain a Director Identification Number, which would put relevant 
information about directors in the public domain.  The Acts regulating the professions of chartered 
accountants, cost and works accountants, and compan y secretaries, were ame nded in 2006 to improve 
the quality of audits through a Quality Review Board.  Stakeholders could thus put increased trust in 
the information supplied to them.  A Bill had been introduced in Parliament to permit the 
establishment of limited liability partnerships. 
23. The Competition Act was enacted in 2002 and the Competition Commission of India 
established in 2003.  The Act was currently under amendment.  
24. Against this background, FDI inflow had increased  greatly in the three previous years.  FDI 
equity inflow had increased from US$2.22 billio n in 2002/03 to US$16 billion in 2006/07, a 
staggering increase of 725%.  If reinvested retained ea rnings were included, in line with international 
practice, FDI into India had reached US$19 billion in 2006/07, constituting 2. 3% of GDP, a quantum 
jump compared to 0.5% of GDP three years earlier.  The targeted FDI equity inflow in 2007/08 was 
US$25 billion.  The fast increase of FDI was a st rong indication of the effectiveness of India's 
policies. 
25. India's exports were booming, as were its im ports.  India's trade deficit had reached 
US$56.7 billion in 2006/07, up from US$8.7 billion in  2002/03. While services exports had expanded, 
services imports had grown even faster in 2006.  The rapid increase in services imports helped not 
only India, but also the countries from which Indi a imported such services.  Nonetheless, under the 
current international trading architecture, labour forc e in developing countries might be loaded against 
their development needs.  Developed countries ha d a tendency to talk about market access in 
developing countries for goods and services of export interest to them.  However, market access to 
developed countries was sometimes thwarted by a pha lanx of protectionist measures, some of which 
were legal, and some not.  The Human Developm ent Report 2005 stated that "developed country 
governments seldom waste an opportunity to emphasize the virtues of open markets, level playing 
fields and free trade, especially in their prescriptions for poor countries.  Yet the same governments 
maintain a formidable array of protectionist barri ers against developing countries."  On average, 
low-income countries faced tariffs three to four times  higher than the barriers applied in trade between 
high-income countries.  Developing countries accounted  for less than one third of developed country 
imports, but for two thirds of tariff revenues collected. 
26. Non-tariff barriers to imports from developing countries were ubiquitous.  Non-tariff barriers 
in the form of restrictive regulations had been  significant impediments not only to developing 
countries' exports, but also their capacity to trade.   Non-tariff barriers in destination countries had had 
a significant impact on India’s expor ts, because these measure s imposed additional costs on exports.  
The frequent and abusive use of non-tariff barriers,  more than serving the ostensible purposes of WT/TPR/M/182 
Page 6  
 
  consumer safety, environment protection, and et hical business practices, had increasingly become a 
hindrance to global trade.  Developed countries' non-ta riff barriers were constantly changing and full 
compliance was nearly impossible as developing count ries lacked the financial resources to comply 
with the standards prescribed.  Moreover, standards were revised, mostly upwards, at regular intervals 
and not necessarily on the basis of objective scientific criteria or reasonable risk assessment, making it 
very difficult for developing countries to adapt to these ever-changing requirements. 
27. Even after more than two decades of rapid trad e growth, the pattern of trade remained highly 
skewed in favour of the developed world.  High- income countries, representing 15% of the world's 
population, accounted for two thirds of world's expor ts.  The share of world exports of sub-Saharan 
Africa, with 689 million people, was less than one ha lf of that of Belgium, with 10 million people. 
28. The current Doha Development Round was a hist oric opportunity to partially correct this 
imbalance.  India was extremely concerned at th e slow pace of negotiations.  While the suspended 
talks had resumed, the political will of devel oped countries was still not evident.  Unless the 
development dimension of the Doha Round was met and the developing countr ies prospered, global 
trade would always be at risk.  The rapid economic  growth of developing countries was a must for a 
truly global trade order to flourish.  India was co mmitted to meeting its obligations under the mandate 
of the July Framework and the Hong Kong Ministeria l Declaration.  Developed countries needed to 
recognize that the destinies of developed and developing countries were intertwined.   
29. Sustained economic reforms required enorm ous investment of both capital and of 
organizational and institutional ability to meet the ch allenges.  Developing countries had a very deep 
deficit in this area, resulting in uneven reforms, as  well as the stops and starts in economic reforms.  
As each country had its own genius, history, cult ure, economic, political, and social institutions, there 
could be no one-size-fits-all reform s.  Each country had to find its way through to prosperity;  
capacity building and hand-holding were therefore essential.  India believed in accelerating its 
economic reform.  The manner in which reforms we re implemented had to be country specific.  
Changing institutions, laws, and rules was often th e easier part;  changing mindsets was the most 
difficult.  Changing the mindset of people and g overnment in the developed world was often even 
more difficult than in the developing world. 
30. The rise of India would engender enormous bene fits for the rest of the world.  A report 
released recently by McKinsey provided extensive discussion on how big an opportunity India would afford to businesses in the years to come.  India co uld become the fifth largest consumer market by 
2025;  its middle class would rise from 50 milli on to 583 million by 2025, creating a unique 
opportunity for both India and the world.  A PricewaterhouseCoopers report stated that, "The rise of 
the E7 (i.e. China, India, Brazil, Russia, Indon esia, Mexico, and Turkey) should boost average OECD 
income levels in absolute terms through creating major new market opportunities".  India's prosperity 
and that of the rest of the world were closely in tertwined.  The world need ed a buoyant, thriving 
Indian economy;  it was in the rest of the world's best interest.  WT/TPR/M/182 
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  III. STATEMENT BY THE DISCUSSANT 
31. The discussant (H.E. Mr. Eckart Guth) recalled that many of the advances in sciences had 
been made in India centuries ago.  India had not only had very good potential for growth and development in its past, it had even more potential now than ever before.  Nonetheless, as the world's 
largest democracy, India still faced big challenges a nd risks, and would have to continue its present 
reform efforts in many policy areas.   
32. Regarding macroeconomic environment and su stained development, he acknowledged that 
India's economic performance in recent years had been very impressive.  The economy had been 
growing on average at 8% over the last four y ears, with increased openness and consumer and 
investor confidence.  It was forecasted that India ha d the potential to grow faster than any other major 
economy over the next half of a century.  Much of th is performance was due to India's unilateral trade 
reform and trade liberalization, from which many of  India's trading partners  had benefited greatly 
also. 
33. However, despite the su ccesses, concerns remained on the sustainability of India's strong 
growth performance.  These concerns included large fiscal deficits and debt levels, and the symptoms 
of an overheating economy.  
34. He noted the low tax to GDP ratio.  India's ta x revenues seemed insufficient to finance its 
needs for the development of, inter alia , infrastructure, education, health, and social programmes.  
India's tax reforms included the in troduction of a new value-added tax, an increase in the number of 
services subject to a service tax, and measures to simplify the tax structure, especially of indirect taxes.  Some taxes that were meant to be replac ed by the VAT continued to be applied, increasing the 
complexity of India's taxation system.  He asked how India would further adapt its monetary and 
fiscal policies to achieve su stained growth of 8-10%. 
35. India had started to liberalize its investment policy framework 15 years ago.  Measures to 
attract foreign investment included increasing the num ber of sectors in which FDI was permitted, as 
well as streamlining the approval and investment pr ocedures.  However, FDI remained below its 
potential.  Investors considered India's regulator y framework rather complicated and inefficient, 
obstructed by bureaucracy and cumbersome regulations , notably at the state level.  Attention was 
needed to guarantee the coherence between th e central and state governments' policies and 
procedures.  The Government had declared a targ et of attracting US$25 b illion FDI in 2007/08, and 
he wondered what its plans were to encourage more FD I to India, so as to reach this ambitious target.  
36. The rapid growth had been accompanied by an improvement in several social indicators, 
including a decline in infant mortality, a reduction of absolute poverty, as well as improvements in 
literacy, and health conditions.  Nonetheless, India was a land of big contrast, combining the capacities of a first-world country with extreme poverty and underdevelopment rates.  There were 
considerable income disparities:  35% of the popul ation (350 million) lived below the poverty line of 
US$1 per day.  Many of these people made their liv ing as subsistence farmers, with limited prospect 
for improving their situation.   
37. Nevertheless, India also had one of the young est populations.  While this would provide a 
ready supply of labour, creating sufficient jobs would become an enormous challenge.  More 
investment in physical and human capital would be needed to generate productive employment for 
new entrants to the labour force, and for India to reap the benefits from the "demographic dividend".  
According to the Financial Times , the Indian Government did not rea lize that its biggest challenge for 
the next 20 years was how to train its young people. WT/TPR/M/182 
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  38. He welcomed measures adopted by India to reduce import barriers since 2002.  Applied MFN 
tariffs, in particular for non-agric ultural products, continued to fall:  peak customs tariffs for industrial 
goods fell from 12.5% to 10% in 2007/08.  Nonethele ss, the big gap between applied and bound rates 
remained, and continued to grow.  Also, the tariff regime remained complex, and changes were announced throughout the year.  These, together with the numerous exemptions, added to the 
uncertainty for traders.  He ask ed whether the Indian delegation would agree that the DDA provided 
the best opportunity to tackle these problems.  
39. The major goal and key focus of India's trade po licy was to increase exports and to generate 
employment.  Export growth was to be facilitated by a range of schemes to "neutralize" duties on 
imported inputs, resulting in a number of duty remission and exemption schemes to reduce the 
anti-export bias.  Hence, in an effort to offset the high taxation of intermed iate products and barriers 
to trade, India chose to maintain and to cultivate an extremely complex system of duty exemption schemes, special investment rules,  and special economic zones (SEZ) , to provide incentives to export 
firms.  Such schemes seemed to contribute much to the complexity of India's trade regime, and he 
suggested that it might be better to reduce the ba rriers (tariff and non-tariff) on imported inputs and 
increase domestic competition, rather than introduce complex export measures. 
40. Agriculture employed roughly 57% of the working-age population in India, but contributed 
only one fifth to output.  Growth in agriculture c ontinued to be slow and erratic.  Investment was 
needed to improve productivity as the sector app eared to be increasingly unproductive.  Largely 
dominated by small farmers, agriculture lacked the economies of scale to encourage the necessary 
investment:  consolidating the sector into bigger ag riculture units would be more viable.  Prolonged 
stagnation of production, rising f ood prices, and indebtedness of farmers, had led to numerous 
suicides of farmers, which was a major national concern in India.   
41. India faced tremendous social and economic challenges in transforming the agriculture sector 
and the rural economy into an industry- and ser vices-based economy.  All developed countries had 
gone through this process by moving the labour for ce from activities with lower productivity to those 
with higher productivity.  In this process, each c ountry had to find its own policy mix.  The only 
option not feasible was stagnation and the preservation of the status quo.  He sought clarification on 
India's policy mix to overcome its present  problem in the agriculture sector.   
42. Both manufacturing and services had considerable potential for growth.  Growth in 
manufacturing had been rapid, due to structural re forms.  However, this sector continued to be 
protected by relatively high tariff barriers, especia lly in textiles and clothing, and automobiles.  
Further growth in manufacturing was also hampered  by lack of infrastructure and labour market 
rigidities.  He asked what India intended to undert ake to overcome these impediments.  The growth of 
manufacturing was particularly important in abso rbing the growing labour force and in allowing 
labour to shift away from the agriculture sector.  
43. Accounting for over 50% of GDP in 2006, the servi ces sector was very large for its level of 
development.  Export of services had increased by 27%, mainly due to increased software services 
exports.  Owing to the liberalization process, India had emerged as a global player and a well-known 
success in the services sector, including information technology, business and knowledge process 
outsourcing, and pharmaceuticals.  
44. Nonetheless, infrastructure remained a major bo ttleneck for the further development of the 
services sector.  Maritime transport and port services continued to suffer from inefficiencies, and 
constituted a major impediment to trade and invest ment.  The civil aviation sector needed to be 
renewed, to maximize the potential of tourism.  W ith frequent shortages of power supply, the losses of 
state electricity boards, and transmission and dist ribution losses, the energy sector was another major 
constraint to economic activities.  Thus, while he praised India for becoming a major global player in  WT/TPR/M/182 
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  services, he also asked about plans to further re form the services sector, to overcome problems in 
infrastructure, and to improve investment conditions.  
45. To maintain India's economic growth, future st ructural reforms would be needed to address 
infrastructure bottlenecks in transport, and problems in energy supply and in the agriculture sector.   
Reforms would need to be accompanied by robust macroeconomic policies, both fiscal and monetary, 
to ensure sufficient public finance and additional direct investment into key sectors, such as 
manufacturing.  India should continue its trade liber alization.  Current protec tion levels on imports of 
both goods and services were still quite  high.  The remaining trade barriers, combined with domestic 
infrastructure constraints including red tape, kept I ndia's competitiveness (parti cularly in agriculture 
and manufacturing) at relatively low levels.  Hence, to allow further economic growth, the 
Government should undertake reforms to reduce the fiscal deficit, promote competition, and facilitate 
investment in infrastructure, health care, and education.  Creating gainful employment would 
ultimately determine whether the current economic miracle would be sustainable. WT/TPR/M/182 
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  IV. STATEMENTS BY MEMBERS 
46. Members thanked the Indian delegation and the Secretariat for their reports.  They looked 
forward to receiving any outstanding replies to their advance written questions.  Many Members 
commended India for the impressive economic performan ce, with average GDP growth of over 8.5% 
since 2003.  Members attributed India's economic pe rformance to the structural reforms, including 
unilateral trade liberalization.  They commended In dia for reducing the average applied MFN tariff 
from 32.3% in 2001/02 to 15.8% in 2006/07.   
47. Members appreciated India's commitment to th e multilateral trading system, and its positive 
role in the WTO and the DDA negotiations.  Some  Members noted India's involvement in regional 
trade agreements.  Several Members noted that their bilateral trade and investment ties with India had 
been strengthened in recent years.  Nevertheless , they noted that continued economic reforms, 
particularly further trade liberalization and measur es to address infrastructure bottlenecks, would be 
required to meet the longer term goal of annua l growth of between 8% and 10%.       
48. The representative of Brunei Darussalam on behalf of ASEAN countries
 appreciated India's 
impressive economic performance.  He expressed the c onfidence that, as high growth rates were to be 
sustained in the coming years, India would be able to address its social and economic needs, and to 
meet the challenges of poverty alleviatio n and of human capital development.   
49. He considered that India would be able to m eet the challenges of infrastructure development, 
particularly in the area of transport and power ge neration, which, if handled effectively and in a 
timely manner, could contribute to promoting investment.  He also commended India's liberalization process on foreign investment, and encouraged it to make more efforts to streamline the approval and 
other investment processes.  Investment could be one of the crucial elements that would allow India to 
sustain its medium- and long-term growth prospects.   
50. There were many fiscal challenges in India.  Fo r example, the tax-to-GDP ratio remained low 
and appeared inadequate to support human capital a nd development related expenditures.  Therefore, 
the tax structure would need to be simplified to make it more effective, and to generate more 
revenues.  Subsidy and price policies, which were estimated to cost as much as 4.2% of GDP, would 
need to be rationalized, so that they could be  reduced without the unintended adverse effect on 
parallel social policy directed at the poor.  Also, the policy on industrial incentives should be 
reviewed to ensure the objective of promoting la bour-intensive activities, in particular if capital-
intensive industries located in the economic zones were  involved.  In addition, a review on state-level 
incentive programmes could better assess the impact  of these programmes on the fiscal balance and 
monetary signals.  As SOEs could compound the fi scal deficit, privatization of SOEs had to be 
resumed.   
51. He welcomed India's tariff reductions.  Alt hough bound rates remained high, at almost 49%, 
and that of agriculture was even higher, at 117%, he  still believed that India would persist in its goal 
of reducing tariffs, especially the peak rates (almost 4% of all tariff lines).  India placed utmost 
importance in achieving ASEAN levels of prot ection for non-agricultural products by 2009. 
52. Nevertheless, he encouraged India to accord fu ll consideration to the further and faster 
liberalization of agricultural products, such as pepper, palm oil, cloves, garlic, and meat products.  He 
also encouraged India to exercise maximum r estraint in initiating anti-dumping and safeguard 
investigations and imposing such measures.  
53. In 2002, ASEAN and India had signed a Framework Agreement on Comprehensive 
Economic Cooperation.  Negotiations on an agreemen t on trade in goods (TIGA) had been launched  WT/TPR/M/182 
 Page 11 
 
 
  since 2005, and were expected to be concluded in  2007, with the commencement of implementation 
in 2008.  
54. The representative of Singapore  remarked on the strengthening bilateral trade and investment 
ties, owing to both the entry into force of a bila teral trade agreement in August 2005, and the robust 
growth of the Indian economy.  Nonetheless, he w as concerned with the relatively high initiation rate 
of anti-dumping cases by the Indian Government.  As Singapore was a key manufacturer and exporter 
in the chemistry sector, he was also concerned w ith the high concentrati on of India's anti-dumping 
measures in this sector.   
55. The representative of New Zealand  congratulated India for maintaining an impressive level of 
economic growth.  This growth was largely driven  by the services sector, which had benefited the 
most from the Government's liberalization polici es.  Information technology, telecommunications, 
and air services all contributed strongly to the I ndian economy.  Manufacturing had been developing 
fairly fast also.  In this respect, he welcomed India's progress in reducing non-agricultural tariffs, and 
hoped India would continue this trend.   
56. Notwithstanding India's impressive economic grow th, there were still major challenges facing 
the economy.  Structural reform, including trade libe ralization, had played a role in India's high 
growth rate in recent years, and he encouraged In dia to build on this reform platform, including 
through further liberalization of trade in goods and services.   
57. Tariffs for agricultural products remained high.  In addition, the tariff structure remained 
complex, with variations from state to state.  Th is complexity became even worse with the imposition 
of additional and special additional duties, a nd uncertainties regarding tariff rate quotas.   
58. Also, direct and indirect subsidies on agriculture  had been at the expense of public investment 
in infrastructure and research.  While India was c oncerned about food security, the benefits from more 
market-oriented approaches could help address t hose concerns.  He noted the moves by India's 
corporate sector to invest in agriculture, and new developments in retail marketing.  Continued and 
deepened reform was the best way towards a sustainable level of growth and a reduction of poverty.   
59. The representative of Switzerland  welcomed the dynamism of Indian businesses, which had 
benefited from a progressive opening of the I ndian economy, and had taken advantage of the 
opportunities of globalization.  As Indian entr epreneurs were increasingly becoming competitive in 
international markets, he was convinced that India would play an active role in the global economy.  
He commended the increase in bilateral trade.  The globalization of the Indian economy was also 
reflected in the recent increase of outward i nvestment activities of Indian companies.   
60. Nonetheless, reforms had to be continued.  G overnment intervention with respect to import, 
export, and investment remained high.  Despite si gnificant tariff reductions, applied tariffs remained 
relatively high, and the discrepancy between bound a nd applied rates continued to create significant 
uncertainties for traders and investors.  The various  measures adopted to mitigate the anti-export bias, 
including the duty drawbacks, other indirect ta x concessions, and anti-dumping duty exemptions, had 
created a highly complex trade regime.  Furthermor e, India's tax system, as well as foreign ownership 
limitations, created potential distortions to both inv estment and financial decisions by investors.   
61. With the introduction of the new Patent Act in 2005, India had showed its willingness and 
capacity to achieve substantial progress in sensitiv e issues related to IPR protection.  Ensuring 
effective implementation would be in  the interest of India's own indus try.  As the new Patents Act had 
not yet been subject to review, he sought clarification related to, inter alia , the scope of patentability, 
the treatment of patents relating to pharmaceuticals f iled before the entry into force of the new Patents 
Act, patent administration, and rules relating to the unfair commercial use of test data.  WT/TPR/M/182 
Page 12  
 
  62. The representative of the European Communities
 pointed out that India had undergone an 
impressive development and transformation in the last decades.  However, India also faced many 
challenges;  the most important one was how to ensure sustained growth, and development for all 
Indians, many of whom still lived in poverty. 
63. India had paid attention to the development ch allenge as part of its economic reforms.  The 
number of people living below the poverty line had b een halved in the past 20 years.  Although more 
needed to be done to tackle the still serious level of poverty, the rising inter-state disparities, and the 
income inequalities, India was conscious of the need  to further pursue development through trade.  
This, however, would have to be underpinned by cred ible economic and structural reforms, including 
upgrading India's infrastructure.  WTO Membership  would play a helpful role, as abiding by WTO 
obligations, both present and future ones under the DDA, would help lock in domestic reforms. 
64. Indian companies had been rema rkably successful in investing ab road, including in Europe.  
At the same time, India had managed to attract signi ficant foreign investment inflows.  Nevertheless, 
actual investment had not met expectations, implyi ng that some barriers remained.  It would be 
important to tackle these remaining impediments, to reach the investment level required to support 
growth.  The improvement to the investment climate must also be accompanied by greater openness 
to trade.   
65. During the ongoing reform process, one of the ma in challenges for India was the balancing of 
social and economic development.  With its large population, India needed to address issues such as 
the uniform application of employment standards, continued job creation, and improvement of skills, 
all of which required innovative and sensitive responses.   Trade policy could play an important role in 
reinforcing social development, for example, th rough the creation of secured employment in export-
oriented sectors and industries, as well as through  supporting environmental objectives.  She sought 
India's views on how trade policy could best contribute to sustainable development, and how some of the social and environmental effects of trad e liberalization could best be addressed.  
66. India was pursuing further trade integration in the SAFTA context, and she encouraged India 
to carry regional economic integrati on and development forward.  She was interested in India's views 
and plans for further regional trade integration. 
67. The EC was concerned with the structure of I ndia's tariff and the high level of unbound lines.  
Despite progress made in the 2007/08 budget, notabl y the decision to lower applied rates, the 
significant gap between the bound and applied rates re mained, and the complexity of the tariff system 
could deter traders.  The EC urged India to cons ider whether across-the-board duty reductions could 
be more beneficial for the economy than selective duty exemptions in certain export sectors.  The 
system of additional duties and fees applicable to  imports both added to the overall duty burden, and 
led to questions of parity in treatment of dom estic levies and taxes in some sectors.  The EC 
encouraged India to be ambitious in addr essing all these problems through the DDA.   
68. The EC also urged India to improve the transparen cy of domestic regulations affecting trade.  
Lack of transparency in the regulatory requirements, and the sometimes cumbersome procedures and 
bureaucracy all contributed to a difficult business envi ronment.  Hence, alignment with international 
rules and standards could improve the trading envir onment considerably, particularly in areas of TBT 
and SPS.  
69. Despite progress already made, the services sector had much further potential.  However, the 
agriculture and manufacturing sectors were equa lly significant for employment opportunities and 
balanced growth.  India needed to pursue furthe r trade liberalization and remove infrastructure 
bottlenecks, so as to sustain high annual economic growth.  WT/TPR/M/182 
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  70. India could do a lot by choosing the right po licies and measures to address its numerous 
challenges, including economic, structural, and social aspects.  But it also needed the help of other 
WTO Members.  In this context, India had a vest ed interest in maintaining and strengthening the 
WTO.  As a leading representative of the developing world, India's membership of the G4 in the DDA 
carried significant weight and expectations.  The EC urged India to offer important further preferential 
access to its market for least developed countries.  
71. The representative of Mexico  noted two basic lessons learnt from India's economic 
development.  The first was that when structural reforms were applied properly, countries could grow 
quickly.  The second was that these reforms, including in ternal and external refo rms, such as trade and 
investment liberalization, should not be held back.   
72. More efforts were needed to reform agriculture, the weakest sector of the economy, so as to 
reduce poverty.  As agriculture employed a large part  of the population, to integrate this population in 
the globalization process would be the target of refo rms.  He also explained that, despite progress 
made in the banking sector, the foreign investme nt policy framework, and the telecommunications 
services, further reforms were required in relation to transport and electricity services.   
73. The representative of Chinese Taipei  commended India's economic performance since its last 
Review, and noted that such outstanding performance  was due mainly to India's unilateral trade and 
structural reforms.  There was room for I ndia to deepen and broaden these reforms.   
74. India had relatively high applied tariffs, which might constitute a significant entry barrier to 
imports.  Its bound tariff rates were even higher.  In  addition, India continued to be a major user of 
anti-dumping measures, largely against imports such as chemicals, plastics, base metals, and textiles.  
All these could imply that certain industry sectors had been overprotected.  Lowering the level of 
import protection would be a useful way for India to restructure its industries and to make them 
globally competitive. 
75. More FDI could be an alternative to promot e India's economic growth, given that public 
spending had been constrained by the Government's fiscal position.  However, FDI in India remained 
low, suggesting that some policy adjustments were  needed, such as further relaxing restrictions on 
foreign participation, increasing the transparency of  the regulatory regime, a nd further opening up the 
domestic market.   
76. A more liberal, rules-based, multilateral tradi ng system would provide India new markets for 
its exports and make it more attr active to foreign investors.  He urged India to make concrete 
liberalization commitments that contributed to secu ring an early successful conclusion of the Doha 
round. 
77. The representative of Australia  noted the growing bilateral trade and investment ties, 
reflecting partly India's growing demand for input s to its expanding industrial sector.  Australia 
appreciated reforms undertaken by India, but had several concerns.  He urged India to address the 
relatively high tariffs in the textiles and automobile sectors, and to simplify the complicated regime of 
import licensing, duty remission, and exemption arrange ments, as well as its export regime.  Australia 
was also concerned with the high tariffs on some ag ricultural products, such as wine and spirits, and 
subsidies provided in the agriculture sector, includi ng sugar.  These measures restricted trade and 
limited productivity growth.  Australia urged India to  bind its unilateral trade liberalization measures 
in goods and services as part of the outcomes of the current Doha Round.   
78. The representative of Japan  stated that during the last two decades, world politics had 
undergone three major changes:  the end of the cold  war;  the more complicated situation in the 
Middle East;  and the real integration into the wo rld economy of one third of the world's population, WT/TPR/M/182 
Page 14  
 
  i.e. China and India.  Japan was impressed by India's strong commitment and leadership towards 
opening up the economy, and its determined and stab le macroeconomic policy.  India's long-standing 
democracy and the growing middle class made India' s economic growth seem irreversible.  In a 
democratic country where more than half of the population was in farming, a rapid change would not 
be realistic.  India's strong partnership with the rest of the world was also impressive:  India had 
established itself as a reliable and positive partner to  others, and Japan had started bilateral trade 
negotiations with India.   
79. Further efforts were required to address:  the shortage of infrastructure;  lack of FDI;  and 
accession to the GPA.  Infrastructure relating to tr ansportation was a major problem and Japan would 
continue to extend support in this regard.  To attract more FDI, m easures should be adopted to enable 
companies to, inter alia , acquire land more easily, and conduct cross-province business more 
smoothly.  Further liberalization in finance and telecommunications would help also.  Access to the 
GPA would show India's willingness to open its public sector to the rest of the world. 
80. The representative of the United States
 stated that this Trade Policy Review had come at a 
critical juncture in India's economic growth.  Th e United States commended India for continuing to 
open more sectors to FDI, reducing applied tariffs  and non-tariff barriers, and enhancing the overall 
business climate.  All these efforts had contributed to  India's rise to the fourth largest economy in the 
world in purchasing power parity terms, and its em ergence as a leading competitor in information 
technology, pharmaceuticals, and business process outsourcing.  The United States encouraged India 
to continue reform in telecommunication services,  and noted the recent government announcement to 
reduce tariffs for non-agricultural products.  Desp ite the impressive econo mic performance, the pace 
of reform had slowed over the past year, which,  as predicted by many economists, had prevented 
India from achieving even greater economic growth. 
81. The services sector, accounting for the majority of GDP, grew at nearly 10% in 2005/06.  
Being the most dynamic sector in the economy, the sector had benefited greatly from liberalization reforms.  Nonetheless, these reforms had been une ven and limited in scope:  for example, financial 
services remained subject to stringent limitations on foreign participation and scope of business;  
other sectors with important spill-over effects for economic growth, such as retail distribution and 
legal services, remained entirely closed to foreign investment.  The existing openness in some sectors, 
such as in express delivery and audiovisual service s, should be bound and e xpanded in the course of 
the DDA services negotiations.   
82. The agricultural sector had undergone significantly less liberalization.  Reforming this sector 
was very challenging as it sustained the livelihoods of two thirds of India's vast population.   
83. The manufacturing sector was held back by India's complex system of customs duties, 
additional duties, and special additional duties.  Indi a had no official, centra lized, comprehensive, and 
easily accessible publication of its applied tariffs:  this  created uncertainty for traders.  In addition, 
some imported products appeared to be subject to dut ies in excess of bound rates, or a higher tax rate 
than domestic products.   
84. Over the past few years, India had established itself as an active user of trade remedy 
instruments.  The United States had concerns about  the transparency of the Indian investigatory 
process, and considered that rules negotia tions could result in improved commitments  in this area, and 
contribute to more transparent practices.  
85. In the area of TBT, India was actively invol ved in international organizations, and the 
establishment of a new Food Safety and Stan dards Authority to oversee SPS regulations.  
Nevertheless, the United States remained par ticularly concerned about India's progress for 
developing, promulgating, and impl ementing its technical rules in the industrial and agricultural  WT/TPR/M/182 
 Page 15 
 
 
  sectors.  India's regulatory schemes in these sectors se emed often to serve as disguised trade barriers.  
Hence, the United States encouraged India to make timely and regular notifications to the WTO TBT 
and SPS committees. 
86. India had taken steps to strengthen its inte llectual property rights regime.  Protecting 
creativity and innovation was important for encouraging investment, as well as for furthering 
economic development.  He enqui red about India's plans to strengthen protection for copyrights, 
including by implementing the WIPO Internet Treat ies, trade marks and patents, as well as plans to 
strengthen protection against unfair commercial use of  data generated to obtai n marketing approval.  
Moreover, the United States urged India to strengthen its IPR enforcement system by, inter alia , 
enacting and implementing an effective optical disc licensing scheme to combat optical disc piracy.  
87. The United States strongly encouraged India to join the GPA.  The Committee on 
Government Procurement had reached provisional ag reement on a substantial revision of the GPA.  
One aim of the revision was to f acilitate accession to th e GPA, especially by developing countries.  
India should review the revision and move forward on accession to the GPA:  for instance, it could become an observer in the Committee. 
88. The representative of the Republic of Korea
 believed that India's economic success dated 
back to 1991, when the Indian Government had in itiated structural reforms, including unilateral trade 
liberalization.  As trade liberalization had been highly beneficial to the Indian economy, he urged 
India to play a leadership role in the DDA negotiations.  
89. Korea was concerned about India's complex tari ff system.  Despite the continued reduction of 
peak tariff rates, effective tariff rates remained high due to various additional and special duties and 
charges.  For example, although peak rates for ma nufactured products in 2007 was 10%, total tariff 
rates were 34.13% due to additiona l duties of 16.48%, special duties of 4%, and the education cess of 
3%, which sometimes went above the bound rate.  In  addition, numerous tariff exemptions announced 
throughout the year made the tariff structure even mo re complicated.  Korea requested India to reform 
its complex tariff system so as to enhance the predic tability of its trade regime and to promote further 
trade. 
90. The number of new dumping investigations take n by India and the dumping orders in force 
had been declining.  However, Korea remained concerned by India's continuous use of anti-dumping 
measures, and requested the Indian Government to  take a more prudent approach when initiating 
anti-dumping investigations and not to use them as a systemic trade barrier. 
91. The representative of Colombia  commended India's economic performance in the past 
25 years, but noted that new reforms were required, for example, to eliminate hidden subsidies in the 
form of low-cost electricity and water for farmer s, to increase flexibility in the labour market, to 
allocate more resources to social sectors, such as he alth and education, and to reform the agriculture 
sector.  India's market was very large and its pr otection measures could not contribute to the Doha 
round.   
92. Solving the problem of unemployment was the mo st important challenge, particularly as India 
was the second most populated country in the world.  Nonetheless, India also had a vast supply of young people in the labour market, and its population w ould continue to be active to the year 2040.  
This young work force provided advantages not only in  the labour supply, but also in saving rates, 
social security, and public finances. 
93. The representative of Brazil
 stated that India's impressive economic performance was not a 
recent phenomenon.  Between 1980 a nd 2002, the country's economy had grown on average at 6% 
annually, making India one of the best-performing nations in the last quarter of the 20th century.  At WT/TPR/M/182 
Page 16  
 
  present, more than 100 Indian companies had a ma rket capitalization of over US$1 billion, and 125 of 
the fortune 500 companies had R&D bases in India.  The age curve of the Indian population pointed 
to the imminence of a "demographic dividend", wh ereby a large young workforce would become ripe 
for contributing to the expansion of the economy, as long as the appropriate conditions were in place.  
In 2005, the combined output of emerging economi es surpassed that of the developed economies, 
accounting for more than 50% of the world's GDP.  India's share should not be underestimated.  The 
re-emergence of India provided additional impetu s to the growth of the world economy, making new 
partnerships possible and providing new investment  opportunities to the benefit of all.  A new 
geography of the world economy was taking shape,  and Southeast Asia would be a significant 
component. 
94. The Doha Declaration on the TRIPS Agreement and Public Health, unanimously adopted by 
WTO Members on 14 November 2001, asserted that intellectual property rules should not prevent countries from protecting public health.  Brazil welcom ed certain elements in India's national patent 
legislation and practices, in particular the appli cation of an effective threshold of novelty and 
inventive step in the examination of patents on drugs and medicines, which appeared to be a 
considerable improvement in the quality of patens gran ted in India.  Public c onsultations regarding the 
state of art in the medical technologies also seemed to contribute to a more effective system.  He asked India to share its experience in this area.  Brazil also commended India for its efforts to improve 
the international IP system, as concerned certain  principles and objectives of the Convention on 
Biodiversity.  In particular, India's active s upport for an amendment to the TRIPS Agreement on 
disclosure of origin of genetic resources and asso ciated traditional knowledge was a critical step.  
95. The representative of Canada
 congratulated India on its progress in reducing its applied tariffs 
and on simplifying the tariff structure.  However, applied MFN tariffs remained high for agricultural 
products, there was a significant gap between bound and applied tariff rates, and there was still a 
considerable number of unbound lines.  All these provi ded the Indian authorities with considerable 
leeway to raise tariffs, hence creating unpredictability for traders.  
96. Canada appreciated India's efforts in reform ing its international pr ocurement contracting 
process.  Although India was not a party to the WTO Agreement on Government Procurement, it was 
important for India to ensure competitive procurem ent procedures so as to limit distortions in 
international trade.  Canada encouraged India to  consider observer status leading to eventual 
accession to the GPA. 
97. India had made efforts to harmonize its national st andards with international ones.  It had also 
taken steps towards streamlining SPS procedures, in  particular the passing of the Food Safety and 
Standards Act in 2006.  Canada urged India to de velop and begin to enforce regulations and rules 
under this Act.   
98. Canada welcomed measures adopted by India sin ce its previous Review to strengthen its IPR 
regime.  Canada also commended India for encour aging foreign investment by simplifying the 
approval process and increasing the number of secto rs in which FDI was permitted.  FDI was an 
important lever for economic growth and diversification, and Canada encouraged India to continue its 
efforts to implement the proposed changes to the foreign ownership restrictions in the insurance 
sector.   
99. Canada recognized India's active and importa nt engagement in the DDA negotiations, 
however, significant commercial presence restrictions remained in India's services schedule. 
100. The representative of Norway  noted that by reducing barriers to trade and investment, India 
had gradually entered the global markets and r eaped many benefits.  It was services, not 
manufacturing, that had been the main engine of economic growth.    WT/TPR/M/182 
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  101. India remained a frequent user of anti-dumping measures, though the number of 
investigations and measures in force had declined .  In general, Norway was concerned about the 
increase in the number of actions taken as well as the number of countries resorting to the anti-dumping instrument.  The present anti-dumping rules contained weaknesses, and a lack of clarity in some provisions had led to abuses.  Stricter rules would therefore be a welcome outcome of the 
DDA negotiations. 
102. The representative of Chile
 stated that this Review was taking place at a time of great 
optimism for India.  The economic growth, and the c onsequent improvement in the standard of living, 
was attributed partly to the growing opening up of  the Indian economy to competition.  The opening 
process included the gradual liberalization of various  sectors to foreign investment, the reduction of 
tariffs, the entry of private operators in the infrastru cture system, and the simplification of tax system.  
Chile encouraged India to continue its reform, part icularly in the area of agriculture.  He noted the 
increasing bilateral trade relations, as well as concerns with regard to duties on imports of wines.   
103. The representative of Argentina  stated that India's high growth rate as well as the rapid 
growth of its trade demonstrated the benefit of ma rket opening and measures to liberalize investment.  
Nonetheless, challenges remained.  For instance, import tariffs on agricultural products were already 
much higher than those on industrial goods, and du ties on a number of agricultural products had been 
increased during the review period.  Argentina apprec iated India's efforts to integrate and streamline 
SPS procedures, but remained concerne d about some SPS-related issues.   
104. The representative of Hong Kong, China  recognized Members' rights to resort to 
anti-dumping actions under the WTO Agreement, but she noted that India was one of the most 
frequent users of anti-dumping measures.  Hong Kong, China urged India to make prudent use of this 
instrument to avoid possible abuse, as this c ould severely undermine market access and affect 
legitimate trade flow.   
105. Given that the services sector was the dominant c ontributor to India's GDP, continued efforts 
to liberalize trade in services would be beneficial for India's further economic development.  India had 
undertaken initiatives for economic reforms and to liber alize its foreign investme nt regime in banking, 
telecommunication, and transportation, and she encour aged India to consider binding its liberalization 
efforts, especially in terms of the relaxed equity lim its and reduced restrictions for foreign investment, 
in the current round of services negotiations so as to  increase the predictability and certainty of its 
trading regime.  India participated actively in th e market access and rule-making negotiations in the 
services area.  The development of disciplines in  domestic regulation was particularly important, 
otherwise the new market access secured through negotiations could be severely undermined.  
Hong Kong, China agreed with India on the importa nce of keeping a balance between the right to 
regulate, and the necessity to ensure that regulations would not become unnecessary barriers to trade.     
106. The representative of Pakistan  commended India's reform process, which had resulted in fast 
economic growth.  In particular, he appreciated tari ff reduction measures.  Desp ite the fast increase in 
bilateral trade, many non-tariff barriers and complic ated SPS procedures in India had prevented this 
trade from reaching its potential.  Pakistan was also  concerned about transparency, as it was hard to 
find any official publication containing all the information on India's tariffs, fees, countervailing 
duties, special CVD, national calamity duty, addition al excise duty, and education cesses.  Taxes kept 
changing, and taxes levied by the state government s on inter-state commerce added further cost to 
traders.  
107. The representative of Sri Lanka  stated that in addition to an FTA, Sri Lanka and India were 
negotiating a Comprehensive Economic Partnershi p Agreement, to cover services and economic 
cooperation.   WT/TPR/M/182 
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  108. India's average applied tariff had decreased in recent years.  The progressive simplification of 
its tariff regime had contributed to transpar ency, although a significant gap between bound and 
applied rates remained.  Predictability for traders would be largely improved if more tariffs were 
bound at lower rates, thus reducing this gap. 
109. India's more open trade policies had contributed to improved social welfare and the 
alleviation of poverty.  Sri Lanka commended Indi a's measures to encourag e the private sector to 
participate in the development of infrastructure, through promoting public/p rivate partnerships in 
infrastructure, private sector investment in areas su ch as power, ports, and airports, as well as reforms 
in pricing policies in government procurement such as electricity. 
110. India and Sri Lanka were members of the South Asian Free Trade Agreement and the Asia 
Pacific Trade Agreement.  Both were also negotia ting to finalize an RTA under the framework of Bay 
of Bengal Initiative for Multi Sectoral Trade and Economic Cooperation.  Sri Lanka appreciated 
India's effort to build strong economic and trade lin ks with its neighbours, par ticularly the members of 
the South Asian Association for Regional Cooperation.   
111. The representative of Egypt
 commended India for its recent economic achievements, and 
noted that there were still challenges.  He also not ed the historical ties between the two countries.   
112. The representative of China  stated that significant structural reform, including trade 
liberalization, had contributed to India's impr essive economic performance.  Despite the rapid 
development of a bilateral economic and trade rela tionship, China was concerned with India's trade 
remedy measures.  He urged India, when seeking to use trade remedy measures based upon sound legal and factual ground, to practice restraint in initiating anti-dumping investigations so as to ensure 
the smooth flow of trade.  As a key player in the multilateral trading system and a leading member of 
the G20 and G33, India played an important and cons tructive role in pursuing development as the core 
issue of the Doha Round negotiations.   
113. The representative of Benin
 commended India's fast economic growth, and noted the 
remarkable growth of household savings, the growth of the contribution of the private sector to 
domestic savings, the strengthening of internal de mand, the strong performance of tax and budgetary 
reform, as well as the rapid development of services, manufacturing, and agriculture.  
114. The representative of Uruguay  highlighted India's active role in the G20, whose goal was to 
achieve fundamental reform to bring agriculture to the same level as other sectors in global trade, so 
as to achieve a fairer multilateral trading system.  The increase of bilateral investment was an example 
of investment between developing countries and repre sented a vision of the future for the integration 
of developing economies into the world economy.   
115. Despite tariff reductions, the tariff remained complex.  Tariff changes had been announced 
throughout the year, as well as numerous exemptions , a number of which were based on industrial 
use.  The export structure also re mained complex.  She urged India to  continue reforms to maintain its 
economic growth, and sought clarification from the I ndian authorities on their future reform plans. 
116. The representative of Nicaragua  commended India's extraord inary economic growth, which 
had been translated into improved living standards.   Nonetheless, India needed to increase its fiscal 
revenues to meet the investment  requirements.  Encouraging pr ivate investment and promoting 
productivity of the agriculture sector were also ch allenges for the Indian Government.  The problem 
of small and marginalized farmers, and subsequent ly the related food-security and rural-development 
issues continued to be priorities for the further development of India.  WT/TPR/M/182 
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  117. The representative of Turkey  acknowledged that trade liberalization was one of the main 
reasons behind India's impressive economic growth .  She commended the Government's decision to 
reduce tariffs unilaterally.  However, despite the overall downward trend in tariffs, Turkey remained 
concerned with the difference between the bound an d the applied tariff rates, which could add to 
unpredictability.  There was room to further libera lize India's export regime, through the elimination 
of current complexities such as export prohibitions and restrictions.   
118. The representative of Ecuador  stated that the two countries shared a global vision for the 
multilateral trading system.  Their bilateral trade re lationship had grown over the past ten years, and 
could be strengthened through India's continued effort s to remove import barriers, such as by bringing 
the MFN bound rates closer to the MFN applie d rates in the agriculture sector.     
119. The representative of Nigeria  acknowledged India's leadership ro le in the multilateral trading 
system, particularly its strong commitment a nd support for an early conclusion of the DDA 
negotiations.  He also commended India for providing  trade-related technical assistance and capacity 
building for African countries.  Nigeria had benefited significantly from India's comparative advantage in the IT industry, and drew India's attention to the constraints caused by lack of 
infrastructure, which could limit the growth and devel opment of the IT industry.  He also urged India 
to make more efforts on matters such as the e-Africa Network, pharmaceuticals outsourcing, and its copyright regulations.  
120. Nigeria was concerned with the discriminatory regulation and control of drugs intended for 
export as against those for internal use.  Drugs labe lled "for export only" were not subject to the same 
strict regulations as those for domestic use.  India's poor export regulations exposed countries like 
Nigeria, with weak regulations, to fake drugs.  T hus, Nigeria urged the Indian Government to adopt 
measures in this regard. 
121. The representative of Zimbabwe
 commended India for its impressive growth following the 
adoption of economic reforms in 1991, and for its efforts to reduce the fiscal deficit.   
122. India had made tremendous progress in the services and manufacturing sectors.  India had a 
relatively well diversified manufacturing industry:  it had been able to bring down tariffs significantly, 
and was reaping the benefits of liberalization.   
123. Given the large rural population, particularly those largely dependent on agriculture for food 
and livelihood security, the agriculture sector needed ur gent attention.  India needed to keep the right 
balance between its domestic development needs and international commitments. 
124. The representative of Mali  commended India's achievement in reducing poverty.  Mali 
appreciated India's efforts in providing duty -free and quota-free access of cotton from LDCs, in 
keeping with the Hong Kong Declarations, and in prov iding technical assistance for African countries.   
125. The representative of El Salvador  recognized India's achievement in services, including 
IT-related areas.  She hoped that India's economic gr owth could be sustained, and that measures might 
be adopted in particular to promote th e productivity of the agriculture sector.   
126. The representative of Bangladesh  appreciated India's unilateral trade liberalization, and asked 
India to be more focused in addressing CVD, a dditional charges on TVs, and SPS-related issues. WT/TPR/M/182 
Page 20  
 
  V. REPLIES BY THE REPRESENTATIVE OF INDIA AND ADDITIONAL 
COMMENTS 
127. The representative of India
 (Mr. Pillai) appreciated Members' interest and the lively 
discussion on India's Trade Policies Review.  India had been one of the fastest growing economies in the world during the past few years.  An encour aging feature had been the acceleration of the 
manufacturing sector's growth to 9% per annum duri ng the last four years.  The external reforms 
initiated in 1991 had radically transformed the po licy framework for the industrial sector and had 
improved the investment climate.  Faster growth  of manufacturing was expected to be sustained 
during the next five years.  
128. By and large the recovery had been led by in vestment;  the investment rate had risen from 
25.2% of GDP in 2002/03 to 33.8% in 2005/06.  The gross domestic saving rate, at 26.4% of GDP in 
2002/03, had been rising.  At present, higher ec onomic growth was supported by stronger domestic 
consumer demand.  The Government was confiden t that the uptrend in domestic investment and 
consumption would be maintained, and an average gr owth rate of 9% would be sustained during the 
next five years. The sharp rise in FDI inflows ove r the past three years to over US$20 billion indicated 
the confidence of investors in the sust ainability of India's economic growth. 
129. In a noisy democracy like India, every section of the diverse population had its say in 
Parliament and in the media, giving a superfici al impression of disarray and paralysis.  This 
impression, however, was false.  As the history of reforms, which had commenced since 1991/92, 
demonstrated, different coalitions of parties had diffe rent priorities and agenda of reforms.  The pace 
of reform might have varied, but th e direction had been unerringly positive. 
130. India's trade basket was also diversifying rapi dly, and its exports and imports with developing 
countries in Asia, East Asia, Africa, and Latin Am erica had increased.  India also proposed to 
introduce, in a phased manner, the duty-free quota-free scheme for LDCs in 2007. 
131. As part of economic reforms, tariffs had b een reduced autonomously:  the peak rate for 
non-agricultural products had fallen from 20% in 2004 to 10% in 2007.  Moreover, tariffs on a 
number of basic raw materials, such as organic and inorganic chemicals, polymers, metals, and capital 
goods, had been reduced to 5% to 7.5%.  The G overnment had informed the Parliament of its 
commitment to reduce tariffs further and to align th e tariff structure to those of India's East Asian 
neighbours.  
132. India's tariffs on agricultural products were relativ ely high, but were well below the bindings.  
The tariffs on farm products were fixed, taki ng into consideration several factors including, inter alia , 
affording a reasonable degree of protection of domes tic farmers, for whom farming was a livelihood 
issue.  Also, on a number of agricultural items, tariff s had either been reduced or eliminated;  applied 
tariffs on wheat and pulses were presently "zero". 
133. The progress in tariff reform, logically, had increased the gap between bound and applied 
rates.  This should be viewed as a positive development.  The benef it of low tariffs could far outweigh 
the fears of a possible hike in tariffs up to the bound levels.  
134. Some Members had observed that a large number of India's tariff lines were presently 
unbound.  In agriculture, almost 100% of tariff lines (except 2) were bound in ad valorem  terms.  
Most developed countries continued to maintain a large number of ag ricultural tariffs with complex 
and mixed duties.  It was only in non-agricultural products that 25% of India's tariff lines were 
unbound, and negotiations were ongoing in the Doha Round to bind the remaining lines.   WT/TPR/M/182 
 Page 21 
 
 
  135. Several delegations had expressed concerns about India's other taxes on imports.  He clarified 
that India levied basic customs duties on imports.  Imports were also liable to an additional duty that 
equalled the excise duty levied on a like product produ ced or manufactured in India, with a view to 
providing a level playing field between importers  and domestic producers.  Moreover, a special 
additional duty at 4% was imposed on imports to count erbalance the sales tax, state value-added tax, 
local tax, or any other charges levi ed on a like product on its sale, pu rchase, or transportation in India, 
again, to provide a level playing field.  
136. Some Members had observed that India's tariff structure remained quite complex, and that 
exemptions and exceptions based on industrial use re ndered the system opaque.  He stated that the 
tariff structure was not as complicated as made out to  be.  Also, the duty calculation was fairly simple, 
and the Indian Government was steadily dismantling exemptions.  
137. Regarding transparency and the availability of in formation on tariffs and other taxes, he noted 
that, firstly, data on tariffs was published in the Gazette  and was available online at www.cbec.gov.in.  
Secondly, on the basis of a comprehensive review, a number of exemptions granted through notifications had been withdrawn.  Exemptions ha d been consolidated and were shown in a single 
customs notification No.21/2002-Customs, dated 1 March 2002 (www.cbec.gov.in).  
138. The Government had decided to integrate all taxes into a single goods and services tax (GST), 
with full input tax credit for all taxes.  The intr oduction of the GST based on VAT principle, in line 
with international best practices, was the ultimate goal of indirect tax reforms in India.  The design 
and structure of GST was to be finalized thro ugh a process of consultations between state 
governments, with the target date of 1 April 2010 for introduction of GST. 
139. Regarding concerns about India's recourse to trade remedies, 70% of all India's anti-dumping 
investigations had been conducted between 1998 an d 2003.  Since 2003, there had been a sharp and 
steady decline in investigations instituted and m easures imposed.  The Government was aware of the 
need to exercise restrain t.  In addition, the Government ac knowledged the large gaps in practices 
arising from the text languages, which left room fo r manoeuvre.  Against this background, he strongly 
supported using the Doha Round to clean up texts a nd pave the way for a transparent, uniform, non-
discretionary application of trade defence measures,  including practices such as zeroing, the lesser 
duty rule, and sunset review.   
140. He considered the WTO Secretariat a little premature in expressing doubt about the 
effectiveness of Special Economic Zones in boosting investment and employment.  In the 15 months 
since the SEZ Act and Rules were notified on 10 Fe bruary 2006, investment of US$8 billion had 
already been made, with another US$25 billion unde r way.  So far, over 31,000 people had been 
employed directly in the SEZs, and this figure was expected to rise to 100,000 by the end of 2007, and 
to 4 million by the end of 2010.  The large number of  textile, gems, and leathe r SEZs to be established 
would provide employment for a less skilled labour force.  
141. The Food Safety and Standards Act was passed by  Parliament in August 2006 in an attempt to 
streamline SPS procedures and enforcement.  This Act consolidated 13 laws and envisaged the Food 
Safety and Standards Authority (FSSA).  The re gulations and rules to implement the Act were 
currently being formulated.  
142. SPS measures should be based on scientific principl es of the risk analysis process so as to 
protect the country's plant, animal, and human heal th.  Risk analysis was conducted in consultation 
with technical experts on the basis of well accepted scie ntific principles.  The same principle was used 
in the formulation of sanitary conditions for the import of cattle, sheep, goats, rabbits, and meat 
products.  India's SPS measures were in line with we ll recognized international standards, including 
those of Codex, OIE, IPPC, and were notified regularly to the WTO. WT/TPR/M/182 
Page 22  
 
  143. On the other hand, the process of Pest Risk Analysis conducted by some Members with 
regard to India's exports of certain agricultural products appeared highly subjective and unscientific, 
thus becoming a trade barrier.  For example, it had taken 18 years to export Indian mangoes to the 
United States and Japan.  Even when mangoes were exported to the United States, they had to be 
irradiated.  When exported to Japan, they had to und ergo vapour heat treatment.  He believed that the 
acceptable level of risk had been defined too stringently by some Members, and could not be justified 
scientifically. 
144. FDI was prohibited only for four sectors, i.e.  retail trading (except single-brand product 
retailing), atomic energy, lotteries, and gambling an d betting.  In most sectors, up to 100% FDI was 
allowed under the automatic route.  However,  100% FDI was not permitted for:  FM radio 
broadcasting, insurance, defence production, petr oleum refining in the PSUs, print and electronic 
media, air transport services, asset reconstruction companies, cable network, direct-to-home (DTH) hardware for up-linking, HUB, singl e-brand retailing, atomic mine rals, private sector banking, 
telecom services, and establishment and operation of satellites.  FDI under the automatic route did not 
require prior approval from the Government;  it re quired only an intimation to the Reserve Bank of 
India within 30 days of receipt of inward remitta nces.  Even for sectors requiring the Government's 
approval, a fast track approval mechanism, the Fore ign Investment Promotion Board (FIPB), had been 
set up and most approvals were accorded within four to six weeks. 
145. Consequently, FDI equity inflows had registered  a phenomenal upswing.  He considered that 
the target of US$25 billion for 2007/08 would therefore be easily attainable. 
146. Since its last Review, India had updated its IP-related legislation to meet international 
obligations.  The Patent Act, amended in 2005, had introduced a product patent regime for food, 
drugs, and chemicals.  At the same time, adequa te safeguards were introduced to protect India's 
national interests, in particular, issues related to public health.  
147. Pursuant to the new legislative initiatives,  the Government had also embarked on a 
US$35 million modernization programme for infrastru cture construction and the up-grade of existing 
facilities in the intellectual property offices.  Four state-of-the-art intellectual property offices were in 
operation.  Also, a programme of computerization had been launched to streamline and rationalize 
procedural aspects so as to make the system more efficient and user friendly. 
148. India was now embarking on the second phase of modernization of its IPR regime.  
E-processing of patents and trade mark applications w as likely to be realized soon.  India had decided 
to accede to the WIPO Madrid Protocol and was seeking recognition as an International Searching 
Authority (ISA) and an International Prelimin ary Examining Authority (IPEA) under the Patent 
Cooperation Treaty.  This would put India in an exclusive group of 12 other countries recognized as 
world leaders in the field of IPRs. 
149. He considered the Patents Act fully complia nt with the TRIPS Agreement, as well as the 
Doha Declaration on TRIPS and Public Health.  Sect ion 3(d) of this Act w as aimed at maintaining a 
balance between IP protection and public health c oncerns.  This section was incorporated in the 
Patents Act with the deliberate intention of a llowing access to medicines, while rewarding real 
innovations.  A dilution of this provision coul d have far-reaching consequences on the access to 
essential medicines by millions of pe ople in the developing world. 
150. In recent years the Indian Government had taken a number of initiatives to strengthen IP 
enforcement.  These included:  special training programmes for enforcemen t agencies, such as 
customs and police officials, and general awarene ss seminars and workshops.  Separate anti-piracy 
cells had also been established.  An inter-Ministe rial committee had been set up in the Ministry of 
Commerce and Industry to monitor the enforcement of IPRs.  On 8 May 2007, the Customs had  WT/TPR/M/182 
 Page 23 
 
 
  launched a unique system on IPR protection under whic h all trade mark, copyright, design, and patent 
holders could register their rights with the Cu stoms, allowing customs officers to identify and 
intercept counterfeit goods at the point of entry (a irports and seaports).  Through the newly enacted 
"Intellectual Property Rights (imported goods) Enfo rcement Rules 2007", the Customs could not only 
detain the goods, but also confiscate them, impose co sts towards the damage, and destroy counterfeits, 
as well as penalize and prosecute relevant parties. 
151. India was fully committed to the development of  a legally binding international instrument 
which would prevent misappropriation of genetic resources and traditional knowledge.  A digital 
database, the Traditional Knowledge Digital Library, had been developed in In dia, and was available 
in English, French, Spanish, German, and Japanese.   India recommended National Patent Offices to 
access this database, with a view to avoiding th e granting of patents based  on traditional knowledge 
that had already been in the public domain.  He regarded the recent grant of patents in the United 
States to certain yogic postures as not only absurd, but also illustrative of the extent to which the IP 
regime was being abused.  
152. He appreciated the discussant's comments on Indi a's agriculture, incl uding the need to 
increase production and productivity.  The discussant also referred to aspects such as the lack of 
economies of scale in farming, as well as farmers' su icides.  Several Members suggested the need to 
protect the agriculture sector, and at the same  time to undertake reforms of the sector.  
153. Agriculture continued to be the backbone of India's rural livelihood system.  A number of 
measures had been initiated by the Govern ment to revitalize agriculture. The 11th Five Year Plan, to 
be finalized shortly, focused agriculture on a more inclusive development process.  A meeting of the 
Planning Commission, chaired by the Prime Minister, had been held last week, to discuss the strategy 
for agriculture development in the short and medium term.  
154. Initiatives were being taken to in tensify agricultural research a nd encourage farmers to grow 
high-yield varieties already available.  Various  programmes were proposed, including the watershed 
development in rain-fed areas, expansion of irri gated areas along with efficient water resource 
management, agro-biodiversity and environmental protection, agro-forestry, harnessing of traditional 
knowledge, a regionally differentiate d growth strategy for food and nut rition security, introduction of 
schemes for horticulture, and improvement of livestock  and fisheries.  The objective was to increase 
farmers' income, with the emphasis on both diversification and food security. 
155. A National Horticulture Mission, based on a cl uster approach, had been initiated two years 
ago and was being strengthened.  Various clusters with the potentia l for growing fruits, vegetables, 
medicinal plants were being identified.  Efforts we re also being made to forge backward and forward 
linkages, so as to facilitate value addition and post-harvest management including agro-processing.  
These measures would increase production, as well as the income level of farmers.  Contract farming, linkage with retail chains, and similar innovative ap proaches were also encouraged to modernize the 
agriculture sector and to provide better extensi on services, reduce market uncertainty and enhance 
farmers' income. 
156. To reform the agricultural markets, state govern ments were advised to amend their legislation 
to promote competitive markets in association with th e private sector, so that farmers could get the 
best prices.  This had been realized in some stat es.  Modern terminal markets for fruits, vegetables, 
and other perishables through public/private partnershi ps were being promoted to link farmers directly 
to consumers.  Further, a nationwide informati on network had been established through electronic 
connectivity to provide timely market fee dback and data on prices to farmers.  
157. A special programme was being implemented in 31 districts where a number of farmers' 
suicides had occurred.  As 60% of the agricultura l land was rain-fed and without irrigation, it would WT/TPR/M/182 
Page 24  
 
  be necessary to focus on improving the productivity of  such rain-fed agriculture.  A National Rain-fed 
Area Authority had been set up recently to provi de advice and guidelines, and to facilitate 
convergence of several schemes to address the pr oblems of rain-fed agriculture.  A National 
Commission on Farmers had also been set up to address various aspects of farmers' income, welfare, and productive activities. 
158. The Indian Government was making various effo rts to revitalize the agriculture sector to 
achieve a targeted growth rate of 4% on a sust ainable basis.  The focus was not only on increasing 
production and productivity, but also  on enhancing farmers' income .  However, because of the 
magnitude of the task, and the complexity of the sector, it would take years to transform the entire 
sector.  The pattern of development, particularly  the creation of employment opportunities in the 
secondary and tertiary sectors would also have an impact on the pace of reform in the agriculture 
sector.  
159. Power had been one of the major infrastructur e bottlenecks.  For India, priorities included 
increasing generation capacity, improving the plan t load factor, and reducing transmission and 
distribution (T&D) losses.  During the Tenth Five Year Plan (2002/03 to 2006/07), 23,000 MW of 
additional capacity had been added.  The plant lo ad factor of thermal plants had increased by around 
74% in 2006/07.  However, T&D losses remained. 
160. In the Eleventh Five Year Plan, India planned to add capacity of 60,000 MW.  The 
Government had launched an initiative to devel op coal-based Ultra Mega Power Projects (UMPP), 
each with a generation capacity of 4,000 MW or mo re.  Nine sites had been identified for the 
proposed UMPPs.  Distribution reforms had been id entified as the key intervention area to promote 
efficiency and commercial viability of the sector.  The new electricity policy enabled electricity 
trading, power sale directly by generating agencies to  bulk consumers, and the fixing of tariffs by the 
Electricity Regulatory Commissions.  All these were  expected to provide adequate incentives to 
private investors in this sector.  
161. The Indian IT, IT-enabled services (ITES), and Business Process Outsourcing (BPO) had 
demonstrated their competitiveness, efficiency, and re liability in the global market.  This sector was 
growing:  Indian companies were expanding their services to enable customers to deepen offshore 
engagements, and were shifting from low-end business processes to high-value ones. 
162. IT, as an export success, had contributed to econom ic growth.  It had also been harnessed for 
domestic needs:  there was a proposal to establis h 100,000 Common Service Centres in rural areas, 
which would provide government services and connect  rural India to the World Wide Web.  In 
addition, IT/ITES had had a major impact on the sk illed labour force:  the number of professionals 
employed had grown from 284,000 in 1999/00 to 1,287,000 in 2005/06.  Employment of professionals in the IT sector was estimated to have passed 1.5 million and was expected to reach 
2.5 million by 2010.   
163. The inefficiency in cargo handling at ports a nd the limited capacity had been constraining 
India's global trade by adding to its transaction cost s.  While the cargo handled at ports had continued 
to increase by around 10% per annum in the last fi ve years, average turnaround time had been around 
3.5 days compared with less than half a day at other major international ports.  Over US$12 billion 
was expected to be required in the next fi ve years to upgrade facilities and add capacity. 
164. India was a latecomer to regional and bilate ral trade agreements, unlike some developed 
countries.  The proliferation of RTAs had compelle d India to explore this option.  Nonetheless, the 
Indian Government considered the RTAs were build ing blocks in support of multilateralism.  Some 
delegations mentioned RTAs in the context of furt hering economic integration in South Asia.  He was  WT/TPR/M/182 
 Page 25 
 
 
  happy to report that SAFTA had entered into for ce.  Also, India would endeavour to use SAFTA to 
deepen and strengthen economic and comme rcial linkages in the sub-continent. 
165. India had always been a strong supporter of the rules-based multilateral trading system.  For 
developing countries, the multilateral forum was the best insurance against arbitrariness in trade 
practices.  Moreover, this was the only way to realize the ultimate goal of fair trade.  India was thus 
strongly committed to ensuring a successful conclu sion of the Doha Round, a Development Round, 
where greater benefits had to flow to de veloping countries not developed countries. 
166. Managing change was never easy, and policy change in particular was complex.  
Stakeholders' interests had to be carefully weighed and balanced, for example labour market reforms;  
policy shifts might lead to unintended consequences or unanticipated outcomes;  the pace of reforms 
in a vibrant democracy was not as rapid as might be desirable.  Building consensus and carrying 
political coalitions were not simple, but would yi eld robust policy reforms.  Economic shocks and 
unrelated events often affected the reform process.   In addition, policy reform now would have a 
bearing on the immediate future. 
167. Policy reform was always country-specific.  From India's experience, for years, certain 
industries had been reserved for the small-scale sector , which was entitled to tax benefits.  There was 
a delicate balance of interests between start-up entrepreneurs, and the larger more-established 
businesses.  The tax benefits eroded incentives to inv est, grow, and reap the benefits of economies of 
scale, thus leading to low productivity.  Nonetheles s, arguments for reform on grounds of economic 
efficiency did not meet with immediate acceptanc e.  Building a consensus to de-reserve industries 
took time and patience.  The political lobbying, the pressing need for efficiency gains, and the overall 
macroeconomic environment all affe cted the pace of reform.  Gradually but steadily, de-reservation 
had continued, and at present nearly 90% of indus tries originally reserved had been de-reserved.  
168. India would push ahead with its autonomous , custom-tailored reform programme, and 
expected the support of other Members woul d continue through recognizing and making 
accommodation for the inherent complexity of the process.   
169. The discussant  noted that many Members appreciated India's economic success, and 
attributed much of this success to trade liberali zation policies, many of which had been undertaken 
unilaterally.  Members also recognized India's comm itment and its crucial role in the WTO and the 
DDA negotiations.  
170. The positive evaluations were complemented by "constructive criticism", as many Members 
encouraged India to continue its reform process.  Also, some Members offered solutions to India's 
problems, in particular, the DDA was seen by many as an opportunity for Indi a to address issues such 
as the low level of bindings in goods and services, the gap between applied a nd bound tariff rates, and 
the need to formulate better anti-dumping rules. 
171. India's growth was good not only for India, but also for the rest of the world:  Members had 
commented on increasing bilateral ties with India, both in terms of trade and investment.  While 
moving fast, the Indian elephant always kept one foot on the ground.  Regarding India's network of 
bilateral agreements, he remarked on the demand fo r increased regional trade, and encouraged India 
to show a leadership role in SAFTA. 
172. Some Members had questioned the advisability of providing duty exemptions to mitigate the 
anti-export bias, while others had considered the tax regime could create distortions.  He regarded the 
lack of an official, centralized publication of app lied duties a particular problem for some traders.  
After he had raised this point with the Indian dele gation, he had been told that such a publication WT/TPR/M/182 
Page 26  
 
  existed in India, and that he would be given one.  He hoped that other interested Members could also 
receive copies. 
173. Members had expressed concerns about India's IPR regime, and another major concern was 
anti-dumping measures.  Apparently the Indian authorities had already reduced the number of 
anti-dumping cases.  He encouraged India to employ more human resources to assure, inter alia,  the 
full transparency of the process. 
174. While recognizing the multi-facetted dimension of the agriculture issue, he regretted that the 
sector was still lagging considerably behind other sectors.  On the other hand, infrastructure 
deficiencies, in particular transport (road and shipping), as well as power generation, hampered the 
development of manufacturing and services.  The issue of infrastructure deficiencies needed to be 
addressed by increasing investment;  this investment  demand, as explained by the Indian authorities, 
could be met by combining private and public engagements.  
175. India's position as a world player came with r esponsibilities.  For example, some Members 
had urged India to provide improved access to its markets for LDCs.  Social challenges had also been mentioned.  In addition, a country of the size of India would not only have an impact on global 
environmental development, but was also likely to be among the first major nations affected by global 
climate change.  Thus India had to emphasize global environmental policy in its own interest and for 
the interest of all. 
176. The representative of the European Communities
 commended the Indian delegation for its 
efforts in providing prompt and helpful written replies to the large number of questions.   
177. Despite the impressive growth of investment, ther e was still the potential for further growth if 
the persisting barriers could be eliminated.  The EC  encouraged India to increase the FDI ceilings in 
key services sectors.  The investment climate was a determining factor for India to realize its target of upgrading its infrastructure by using public a nd private partnerships and engaging FDI. 
178. In its replies on its RTAs, India had not provided an analysis of the volume and value of trade 
covered by such agreements, particularly for SAFTA and the CECA with Singapore.  Conducting 
such analyses would be important, particularly give n the multitude of bilateral negotiations India was 
currently undertaking. 
179. The EC remained concerned with the predicta bility and transparency for traders provided by 
India's complex tariff system.  In addition, she noted  from India's answers that further changes to the 
tariff might be made during the current financial year .  This could create considerable uncertainty for 
importers.  She thus encouraged India to consider establishing a single internet information point that 
would actually calculate the overall duty burden by state to further facilitate trade.  This should not be 
an arduous task for a country whose IT experts were world class. 
180. She also sought clarification on SPS-related issu es, including the detailed analysis carried out 
by India on avian influenza.  In particular, sh e asked why India had concluded that imports of 
livestock and livestock products from the EC presente d an unacceptable risk, as they had satisfied the 
requirements of the OIE Animal Health Code. 
181. On government procurement, she asked India to clarify that foreign suppliers could bid in 
open tenders under the same conditions as domestic  companies.  She requ ested the Directorate 
General of Supplies & Disposals to provide a number  or estimate of how many foreign companies and 
Indian agents of foreign companies it had registered.  WT/TPR/M/182 
 Page 27 
 
 
  182. She noted that, although India's imports exceeded its  exports, the majority of imports were not 
for domestic consumption, as they were used as inte rmediary inputs.  Therefore, liberalizing imports 
was also key for India's manufacturing sector.  India should avoid taxing exports through imports. 
183. The EC remained concerned about the impact on investment of certain FDI caps, such as the 
proposal to limit FDI in courier services from 100% to 49%.  Any such forced disinvestment would 
have a negative effect on this sector, as well as on India's reputation worldwide, and she 
recommended India to exercise prudence and cohere nce in the overall direction of FDI policy. 
184. The timely completion of the DDA Round should come as a first trade policy priority for both 
developed and developing countries.  It would thus be the best way to boost the development of India, 
as well as that of all other developing countries.  
185. The representative of the United States  appreciated the written responses provided by India, 
and asked for some further clarifications.  Regard ing the base for calculation of additional duty on 
imports, which appeared to be di fferent, and larger, than that for the excise duty on domestic goods, 
he asked India how it would ensure that the effec tive rates of the additional duty and the excise duty 
were the same when applied to the same classification of product. 
186. Regarding the question on India's preferential ta riff arrangements, he stated that the website 
provided by India did not include several of the pr ogrammes listed in the Secretariat report.  Neither 
did it provide complete information in relation to, inter alia , product coverage, rules of origin, 
preferential rate of duty, and conditions.  He request ed more information in th is area so that Members 
could understand India's preferential arrangements. 
187. Imports of certain items, including second-hand  cars and imports from Sri Lanka subject to 
preferential tariffs (such as tea), had to be importe d through specified ports.  He asked the rationale 
for such a requirement. 
188. India was asked to explain how it determined that a special duty of 4% on imports was 
appropriate to counterbalance internal taxes on domes tic products, when some of these were subject to 
taxation at less than 4%.  In India's response, an  "octroi" was levied by municipalities on entry of 
goods.  He asked India to explain the term "oct roi", and to further clarify the intention of 
municipalities to levy the "octroi" on goods. 
189. On intellectual property, he asked India to ela borate how Section 3(d) of the Patents Act fell 
within the three categories for determining patentab ility:  i.e. novelty, inventive step, and industrial 
applicability.  Further, as the Section 3(d) app lied to pharmaceutical products, he asked whether and 
how this provision applied to other fields of technology.  
190. On copyrights, the United States still had questi ons about whether a compulsory licence could 
be issued under Section 31 and 31A for a U.S.-pro duced work if that work was published in India 
within 30 days of publication in a nother territory.  He also asked about the number of licences granted 
by the Registrar of Copyrights pursuant to Sections 31 and 31A in the last five years, and requested information as to the types of works, uses of works sought by complainants, and any additional 
information on how these licences were granted.  
191. It appeared that a registered trade mark mi ght only be protected against a later-in-time 
geographical indication if the trade mark had been registered before 15 September 2004, the date the 
Geographical Indications Act (GI Act) entered into e ffect.  He asked the Indian authorities to clarify 
whether a trade mark registered after the implemen tation of the GI Act would have priority over a 
later-in-time geographical indication. WT/TPR/M/182 
Page 28  
 
  192. He asked the Indian authorities to provide a c opy of the Satellite Communications Policy.   
193. Quoting the Secretariat report which indicated that India could impose import prohibitions for 
"prevention of agricultural surp luses" as established under the Cust oms Act 1962, he asked how this 
practice operated.   
194. He requested a list of the food safety laws that had been consolidated by the Food Safety and 
Standards Act 2006.  He requested confirmation that  the FSSA would be an independent entity with 
jurisdiction going across Ministries.  Section 16 of  the Food Safety Standards Act listed the activities 
to be assigned to the FSSA;  however, regulation of biotech foods, feeds, and seeds was not listed.  He 
requested confirmation that the FSSA would not have oversight in the area of biotech.  The Ministry 
of Environment and Forests was not listed as a memb er Ministry of the FSSA, and he asked about the 
relationship between the FSSA and the Genetic Engineering Approval Committee (GEAC) in the 
development and oversight of  new biotech regulations. 
195. Certain products on a "sensitive" list were monito red for surges in imports.  He asked India to 
explain what actions would be taken in the event of  a surge in imports;  whether there had been any 
government intervention against sensitive products whose imports had increased beyond a certain 
level;  and if so, what form of intervention had been  made;  in addition, he asked how suppliers with 
substantial interest were alerted. 
196. India would be one of the biggest beneficiaries of an ambitious and successful outcome of the 
DDA negotiations, thus it was one of the key stake holders in the work to  ensure an open and 
rules-based multilateral trading system.  The TPR dialogue had been particularly important given India's new role as a major player in the tradi ng system.  The United States appreciated India's 
liberalization efforts and encouraged India in its  efforts to continue the reform process.   
197. The representative of Japan
 appreciated the Indian delegation's detailed replies to a number of 
written questions submitted by Japan, and looked forw ard to receiving the remaining replies.  Japan 
would submit additional questions, relating to the tariff structure, IPR, mining, finance, and 
telecommunications sector, so as to understand the Indian trade policies better. 
198. The representative of Canada  thanked the Indian delegation fo r its comprehensive responses.  
A number of supplementary clarifications would be  sent to the Indian de legation, covering legal 
services, TBT, SPS, and trade remedy measures.   
199. The representative of India  stated that India took both the review and the questions submitted 
by Members very seriously, and would continue to work on the issues raised during review process, 
so as to use this Review as a means to improve the trade policy regime of India. 
200. India had started its annual FDI policy review  process.  During the process, suggestions by 
Members, particularly the EC, would be taken into consideration.  India would also provide the EC 
with the details on the analysis of trade with SA FTA and the CECA with Singapore.  With its IT 
expertise, India would work on building a single internet site for calculating duties on imports.  
Similarly, on the SPS-related risk analysis, India would share the detailed analysis with the EC.   
201. Regarding comments from the United States, he noted that outstanding replies to questions 
would be provided later.  Regarding the requireme nt to import certain items through specified ports, 
India had limited testing facilities and was therefore attempting to have this cargo enter the country 
through ports with the testing facilities.  He anno unced that certain port restrictions were being 
removed;  and possibly within the next 30 days some  other port restrictions would also be removed.  
India was to enter into "equivalence agreements" so  that the testing conducted by Sri Lanka would be 
accepted by India.    WT/TPR/M/182 
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  202. On the issue of imposing import prohibitions fo r "prevention of agricultural surpluses", this 
was actually a provision in the Customs Act 1962, wh ich had been formulated much before the GATT 
and the WTO.  However, it was only a provision, a nd had never been used.  With subsequent review 
of the Customs Act, he believed that this provision would be deleted.   
203. The list of the food safety laws that had been consolidated by the Food Safety and Standards 
Act 2006 was provided in the annexes to the Act itself;  he undertook to provide the list to the 
United States, as requested.  Members of the FSSA included the Ministry of Health, as well as all 
concerned ministries;  the names of all member Mi nistries would be fixed in the next three months, 
when the FSSA would start to function.   
204. India monitored around 300 items on a "sensitive"  list for surges in imports.  The Government 
would decide whether the surge was a temporary ph enomenon, or a permanent issue, as well as its 
impact on domestic prices.  Tariffs might be adju sted, up or down, depending on the import situation 
and the international price level.   
205. India would provide outstanding answers to ques tions raised by Members within the next 
30 days. WT/TPR/M/182 
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  VI. CONCLUDING REMARKS BY THE CHAIRPERSON 
206. This fourth Trade Policy Review of India h as greatly improved our understanding of India's 
trade and trade-related policies and the challenges it  faces in sustaining, and indeed improving, its 
economic growth.  I thank Secretary Pillai and hi s delegation, the discussant, Ambassador Eckart 
Guth of the European Communities, and Member s of the TPRB for contributing to our fruitful 
exchange of views.  India's response to the large number of questions is also greatly appreciated.   
207. Members all agreed that India's economic pe rformance has been impressive, with GDP 
growth averaging over 7% between 2001/02 (fiscal year , April-March) and 2006/07;  growth has been 
particularly rapid since 2003, averaging over 8.5% and has translated into improved social indicators, including a reduction in the percentage of the population living below the poverty line.  They 
attributed this impressive performance mainly to structural reforms, including unilateral trade 
liberalization, such as reductions in applied tariffs.   
208. Nevertheless, they noted that continued ec onomic reforms, particularly further trade 
liberalization and measures to address infrastructure bottlenecks, will be required to meet the longer 
term goal of annual growth of be tween 8% and 10%.  There was concern that India's relatively low 
tax-to-GDP ratio is seemingly insufficient to meet its  developmental needs.  It was also pointed out 
that privatization of SOEs will have to resume as loss-making SOEs remain a considerable budgetary 
burden.  Given that public spendi ng is constrained by the Government's fiscal position, they suggested 
that FDI could be an alternative source of investment  in infrastructure, thereby contributing to India's 
economic growth.  However, although FDI has been ri sing, it has not met expectations, implying that 
barriers to FDI need to be addressed. 
209. Members commended India's tariff reform, noting that the average applied MFN tariff has 
been cut by half, from 32.3% in 2001/02 to 15.8 % in 2006/07.  The tariff, nevertheless, remains 
relatively high, especially for agricultural products, at 40.8%.  Moreover, the significant gap between 
the applied and bound tariff rates, as well as the co nsiderable number of unbound lines in its tariff 
schedule, provides the Indian authorities with consider able scope to raise tariffs, thereby contributing 
to its unpredictability.  Some Members also remarked  on the lack of an official comprehensive and 
easily accessible publication containing applied tariffs and other charges, as well as the numerous tariff exemptions announced throughout the year  that complicate the tariff structure.    
210. While import tariffs have declined, the export regime remains highly complex, partly as a 
consequence of various measures to neutralize duti es levied on imported inputs used in exports;  
export processing zones and special economic zones al so offer tax holidays to investors.  Some 
Members urged India to consider whether across- the-board import duty reductions would be more 
beneficial than selective duty exemptions.       
211. India's active role in the multilateral trading system was commended, and Members 
encouraged it to continue to show leadership in  bringing the Doha Round to a successful conclusion.  
They also noted India's involvement in regional tr ade agreements.  Some Members encouraged India 
to adopt an ambitious preferential trade regime, offering least developed countries better preferential 
access to its market.   
212. India remains a major user of anti-dumping me asures, although the number of investigations 
and measures in force has been declining.  Memb ers urged India to exercise maximum restraint in 
initiating anti-dumping and safeguard  actions and in imposing such measures.  While applauding 
reforms in government procurement, some Member s encouraged India to consider becoming an 
observer to the Agreement on Government Procurem ent, leading to its eventual accession to the 
Agreement;  this would show India's increased willi ngness to open its public sector to competition.    WT/TPR/M/182 
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  213. Members commended India for taking steps to ali gn its national standards with international 
norms.  They expressed concerns on SPS, but welcomed measures adopted to streamline SPS 
procedures.  They also noted that alignment of standards and SPS measures with international 
practices could improve the trading environment.  St rengthening of the IPR regime was also urged.  
Some Members expressed their appreciation of the ne w Patent Act introduced in 2005, and considered 
that effective implementation of IPR related legislati on would be in the interest of India itself.    
214. Members noted continued government in tervention in agriculture through, inter alia,  high 
tariffs, price support, and direct subsidies to inputs.   Moreover, agricultural growth remains slow and 
erratic, causing considerable distress, especially am ong small and marginal farmers.  Some concerns 
were expressed about the development of the manuf acturing sector, which is being held back by the 
complex customs duty structure, as well as the rela tively high tariffs in textiles and clothing, and 
automobiles.  Members remarked on the superi or performance of India's services sector, where 
liberalization has been most rapid.  Nonetheless,  some noted that reforms in services have been 
uneven and limited in scope, and fore ign investment restrictions remain.  They were also concerned 
that inadequate infrastructure, particularly in tr ansport and electricity, remain a major bottleneck.   
215. This Review has been very informative and has given a useful overview of India's trade 
policies and practices and the challenges it faces.  I would once again like to thank the Indian 
delegation, the discussant, and Members for cont ributing to a very enlightening two days of 
discussions.  We look forward to receiving India's responses to outstanding written questions within 
the next month. 
 
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