WORLD TRADE ORGANIZATION  
ORGANISATION MONDIALE DU COMMERCE  
ORGANIZACIÓN MUNDIAL DEL COMERCIO 
WT/TPR/M/249/Add.2 
28 October 2011 
 (11-5453) 
Trade Policy Review Body 
14 and 16 September 2011 Original: English/ 
 anglais/  inglés 
 
  
TRADE POLICY REVIEW 
INDIA 
Record of the Meeting 
Addendum 
Chairperson:  H.E. Mr. Mario Matus (Chile) 
 
 This document contains the additional adva nce written questions, follow-up questions, and 
replies provided by India.1 
__________________________________________________________________________________ 
 
Organe d'examen des politiques commerciales 
14 et 16 septembre 2011  
EXAMEN DES POLITIQUES COMMERCIALES 
INDE 
Compte rendu de la réunion 
Addendum 
Président:  S.E. M. Mario Matus (Chili) 
 
 Le présent document contient les questions  écrites additionnelles communiquées à l'avance, 
les questions complémentaires et les réponses fournies par l'Inde.1 
__________________________________________________________________________________  
Órgano de Examen de la s Políticas Comerciales 
14 y 16 de septiembre de 2011 
 
EXAMEN DE LAS POLÍTICAS COMERCIALES 
INDIA 
Acta de la reunión 
Addendum 
Presidente:  Excmo. Sr. Mario Matus (Chile) 
 
 En el presente documento figuran las pregunt as adicionales presentadas anticipadamente por 
escrito, las preguntas complementarias junto con las respuestas facilitadas por la India.1  
                                                      
1 In English only./En anglais seulement./En inglés solamente.  WT/TPR/M/249/Add.2 
 Page 3 
 
 
  REPLIES PROVIDED BY INDIA 
CANADA  Additional questions Report by the Secretariat (WT/TPR/S/249) 
Canada 72: 
Part IV. Trade Policies by Selected Sector : (1) Overview: paragra ph 4, page 125:   
This paragraph reads: "Foreign direct investment of up to 100% is allowed for most services 
activities, except for financial services, where fore ign ownership limits apply.  However, specific 
market-access conditions or permits apply, which in  some cases may be more restrictive than an 
explicit investment cap. 
Could India provide examples of typical "market-access conditions or permits" that may 
apply on FDI for the oil and gas, energy, mining and environmental services sectors? 
Reply:  The sectoral policy on FDI is detailed under Chapter 6 of "Circular 2 of 2011 –
Consolidated FDI Policy", which is available in  the public domain, on the website of the 
Department of Industrial Policy and Promot ion. Extant FDI policy in respect of the 
abovementioned sectors is as below: 
(i)  Petroleum and natural gas sector:    FDI, up to 100%, under the automatic route, is permitted in exploration activities of oil 
and natural gas fields, infrastructure related  to marketing of petroleum products and 
natural gas, marketing of natural gas a nd petroleum products, petroleum product 
pipelines, natural gas/pipelines, LNG re-gasif ication infrastructure, market study and 
formulation and petroleum refining in the private sector, subject to the existing sectoral 
policy and regulatory framework in the oil marketing sector and the policy of the Government on private participation in exploration of oil and the discovered fields of national oil companies. 
 FDI, up to 49%, under the Government approval route, is permitted in the activity of 
petroleum refining by the public sector undertakings, without any disinvestment or 
dilution of domestic equity in the existing PSUs.  
(ii)  Energy:   FDI, up to 100%, under the automatic route,  is permitted in: (i) generation and 
transmission of electric energy produced in-h ydro electric, coal/lignite based thermal, oil 
based thermal and gas based thermal power plants;  (ii) non-conventional energy 
generation and distribution;  (iii) distribution of electric energy to households, 
industrial, commercial and other users;  and (iv) power trading.  All the above are 
subject to the provisions of the Electricity Act 2003.  (i) to (iii) above do not include 
generation, transmission and distribution of  electricity produced in atomic power 
plant/atomic energy, since private investment in  this sector/activity is prohibited and is 
reserved for the public sector. WT/TPR/M/249/Add.2 
Page 4  
 
  (iii)  Mining:  
 FDI, up to 100%, under the automatic route, is  permitted in the mining and exploration 
of metal and non-metal ores, including diam ond, excluding titanium bearing minerals 
and its ores, subject to the Mines and Min erals (Development and Regulation) Act 1957. 
 FDI, up to 100%, under the automatic route, is  permitted for coal and lignite mining for 
captive consumption by pow er projects, iron and steel and cement units and other 
eligible activities permitted under and subject to the provisions of Coal Mines (Nationalization) Act 1973.  
 FDI, up to 100%, under the automatic route, is permitted in the setting up of coal 
processing plants like washeries, subject to th e condition that the company shall not do 
coal mining and shall not sell washed coal or sized coal from its coal processing plants in 
the open market and shall supply the washed  or sized coal to those parties who are 
supplying raw coal to coal processi ng plants for washing or sizing. 
 FDI, up to 100%, under the Government route, is permitted in mining and mineral 
separation of titanium bearing minerals a nd ores, its value addition and integrated 
activities, subject to sectoral regulations a nd the Mines and Minerals (Development and 
Regulation) Act 1957. 
(iv)  Environmental services:  FDI, up to 100%, under the automatic route, is permitted in the provision of 
environmental services, subject to applicable  laws/sectoral rules/regulations/security 
conditions. 
Canada 73: 
Part IV. Trade Policies by Selected Sector: (3 ) Services; (i) Overview: paragraph 55, page 138: 
This paragraph reads "[...] As reg ards horizontal commitments, India introduced a series of 
requirements on entry and temporary stays of natural persons such as business visitors and 
intra-corporate transferees."   
Could India explain what are the series of requirements introduced on entry and temporary 
stays of natural persons, and provide the legislative, regulatory and/or policy references for such changes? 
Reply: The extant Acts dealing with entry, stay and ex it of foreign nationals in the country are: 
(i) Passport (Entry into India) Act 1920;  (ii) Foreigners Act 1946;  and (iii) Registration of 
Foreigners Act 1939. 
(i) The Passport (Entry into India) Act 1920, p rescribes specific authorization of foreign 
nationals on their valid travel documents/passp orts for allowing entry into the country.  
Under this Act and the Rules made there under, the foreigners coming to India are 
required to get visa from Indian missions/posts.   
(ii) The Foreigners Act, 1946 regulates the entry of  foreigners into India, their presence 
therein and their departure there from.  WT/TPR/M/249/Add.2 
 Page 5 
 
 
  (iii) The Registration of Foreigners Act 1939 and the Registration of Foreigners Rules 1992 
mandate that certain categories of foreigners whose intended stay in India is more than 180 days, or as provided in their visa auth orization, are required to get themselves 
registered with the registration officer.  
Detailed guidelines about various categorie s of visas are available on MHA website 
www.mha.nic.in, in the form of frequently aske d questions and also for registration of the 
foreigners.  
Canada 74: 
Part IV. Trade Policies by Selected Sector: (3) Services; (v) Tourism: Table IV.13 Selected support 
schemes for tourism, 2011, page 175: 
Under the "Market Research – Professional Services" secti on of this table it is indicated that  "Use of 
professional services from consultants/agencies for:  tourism-related surveys, studies, plans, and 
market research for making available relevant data /information/report/inputs to the Ministry of 
Tourism for policy making and planning purposes;   and feasibility studies and detailed project 
reports (DPRs) for specific tourism projects" and t hat "Maximum assistance of Rs 1 million provided 
for preparation of feasibility studies and DPRs for projects under the Scheme of 
Product/Infrastructure Development for Destination and Circuits." 
Could India indicate if there are any nationality /citizenship and/or residency requirement for 
an applicant to receive funding from the "Market Research: Professional Services" support scheme? 
Reply:   The assistance is not given to any individual .  Companies/firms registered in India are 
eligible to participate in the bidding process fo r various assignments under this Plan Scheme.  
The final award is given after follo wing the due codal formalities.  
Canada 75:  
Part IV. Trade Policies by Selected Sector: (3) Services; (v) Tourism: paragraph 187, page 176, and 
paragraph 192, page 178: 
These paragraphs state, respectively, that "[...] A fore igner may not operate as a travel agent, tour 
operator or tourist transport operator" and "Foreign presence is not allowed in travel agencies, tour 
operator or tourist transport operator." 
Could India explain the public policy rationale behind the decision to forbid foreign presence 
of, and foreigners to operate as travel agents,  tour operators and tourist transport operators, 
and provide the legislative, regulatory and/ or policy references for this restriction? 
Reply:   100% FDI has been allowed in hospitality an d tourism sector.  Under this dispensation, 
subsidiaries of foreign companies can undertake operations in India after registering under the 
Companies Act.  These subsidia ries can operate under the prevailing rules and regulations of 
the country.  
Follow-up questions  
Report by the Secretariat (WT/TPR/S/249) 
Canada FQ 1: 
Part III. Trade Policies and Practices by Measu re: (2) Measures Directly Affecting Imports; 
(x) Sanitary and Phytosanitary Measures:  paragraph 122, page 73: WT/TPR/M/249/Add.2 
Page 6  
 
  Paragraph 122 of the Secretariat's Report notes that  "Imports of plants and plant materials are 
regulated under the Destructive Insects and Pest s Act 1914, the Plant Quarantine (Regulation of 
Import into India) Order (PQO) 2003".   
For some wood exports from North America it is not ed that the only treatment recognized for import 
is methyl bromide, while in other listings both me thyl bromide and kiln drying are recognized.  It is 
further noted that PQO Section 9(1) accepts heat treatment for wood commodities, but this 
acceptance is not reflected in listings of species in Appendix VI of the PQO. 
In most cases, heat treatment is as effective in managing pest risks as is methyl bromide treatment. 
For example, the IPPC has noted
2 that both methyl bromide and he at treatment are effective in 
managing the broad pest risks associated with wood  packaging moving in international trade.  
Original question: 
43. Under what circumstances would India recognize heat treatment in listings where 
these are not currently prescri bed for wood commodities?  
Follow-up question: 
F.1. India has indicated that it may consider adding heat treatment as an option for wood 
commodities, which are currently only permitted en try using methyl bromide or kiln drying. 
The latter treatment is not defined in the P QO. Given provisions in ISPM 15:2009 which 
indicate that both methyl bromide and heat t reatment are equally effective in managing the 
pest risks associated with wood packaging, w ill India revise its requirements to add heat 
treatment as an option for all wood commodity entries specified in PQO in particular for 
Quercus spp. from any country, Castanea spp. from any country, Ulmus spp. from any 
country, Juglans spp. from North America excep t the USA, Prunus spp. from North America 
except the USA? 
Reply: As regards the species of wood commodit ies stated in question, India will consider the 
request of any country to incorporate heat treatment as one of the options. 
Canada FQ 2: 
Part III. Trade Policies and Practices by Measure:  (4) Measures Affecting Production and Trade; 
(v) Government Procurement: (a) O verview: paragraph 21 9, page 106: 
Paragraph 219 of the Secretariat's Report states t hat, "According to the authorities, reforms to date 
have moved India towards a more transparent an d competitive procurement framework."   
Original question: 
Could India please indicate which specific  reforms the Secretariat is referring to? 
Follow-up question: 
F.2. Canada thanks India for its response to this question.  Canada is interested to learn more 
about India's work on a legislative framework fo r public procurement.  Specifically, could 
India indicate if there are any public documents related to its consideration of a legislative 
framework for public procurement?  If so, coul d India provide such documents?  If not, could 
                                                      
2 In International Standard for Phytosanitary Measures (2009) 15.  WT/TPR/M/249/Add.2 
 Page 7 
 
 
  India indicate how WTO Members might access th e relevant public documents in the future 
should India take the formal steps to establishing a legislative framework for public procurement?" 
Reply: A legislative framework for public procurement in the Central Government is under 
consideration of the Government.  However no docu ments have been formalized as yet.  As and 
when the public documents in this regard are released, they would be available on the website of 
the Ministry of Finance www.finmin.nic.in. 
ECUADOR Report by the Secretariat (WT/TPR/S/249) Ecuador 1: 
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 
(3) T
RADE AGREEMENTS AND ARRANGEMENTS  
(ii) Regional trade agreements 
The Report mentions that India has not conclude d many regional trade agreements and lists the few 
that it has concluded.  However, the relevant chapter does not discuss unila teral preferential regimes. 
Does India grant preferences of this type, and if so, on the basis of what criteria? 
Reply:  India grants concessional duty treatmen t to imports from the LDCs under the unilateral 
tariff preference scheme known as Duty Free Ta riff Preference Scheme (DFTP) as per the 
mandate of the Hong Kong Ministerial Meeting of  the WTO.  All LDCs are eligible to benefit 
from the scheme. 
Ecuador 2: 
(4) I NVESTMENT REGIME  
(ii) Foreign investment regime 
Table II.8 in the Report lists 10 strategic sectors in which India prohibits FDI. On what criteria did India base its decision on sec tors that are not open to FDI and what are the 
reasons? 
Reply:  The FDI policy, inter alia , takes into account national priorities and sensitivities, in the 
context of India's developmental goals.  
Ecuador 3: III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) I
NTRODUCTION  
According to the report, India has introduced ''an electronic system for customs clearance''. 
Did India receive any cooperation in applying this  new system, and if so, what did that cooperation 
consist of and who received it? WT/TPR/M/249/Add.2 
Page 8  
 
  Reply:  Indian Customs launched the Indian Customs EDI System (ICES) in 1995, as an 
automated work flow system for clearance of im port and export consignments.  The key drivers 
for this were the need for handling larger volumes of international trade, lowering transaction 
costs, quicker turnaround times for cargo and efficient information sharing with Customs 
community partners.  A Remote EDI System (RES ) was also provided to enable remote filing of 
import and export documents from business premis es of users.  Following the centralized IT 
implementation, the architecture of the earlier IC ES application version 1.0 has been modified 
and the new application ICES 1.5 now runs on an upgraded centralized platform, with strengthened security features.  Any company can use the EDI system as long as they register 
and obtain the import export code (I EC) from the Ministry of Commerce.  
Similarly, in 2005 India introduced a risk man agement system (RMS) as a measure of trade 
facilitation to selectively screen only high and medium risk cargo, for customs examination. 
In addition to EDI and Risk Management Syst em, the other IT initiatives viz. Accredited 
Clients Program (ACP) and e-payment facility have further reduced the customs clearance 
time. 
All stakeholders have cooperated in the implementation of electronic system for customs 
clearance.  
Ecuador 4: The Report also explains that under Indian law, ''i mport restrictions may be imposed on grounds of, 
inter alia, health, safety, moral and security reas ons, and for self-sufficiency and balance-of-payments 
reasons." 
Could India provide us with further details on what constitutes moral, safety and self-sufficiency 
reasons? 
Reply: These measures are in terms of the provisions stated in Articles XI, XX and XXI of 
GATT 1994.  
EGYPT 
Report by the Government of India 
Egypt 1: 1- Page 10 paragraph 18 
Who are India's main services trading partners? Reply:  Bilateral statistics on trade in services are not available officially. However, based on 
information available from industry, India's leading trade partners in services are the 
United States, United Kingdom, Continental Europe (Germany, France and Switzerland), Asian 
countries (including South East Asia, Japan), Australia and Latin America.  
Egypt 2: 
2- Page 11, paragraph 21 
What are the main services sectors that received FDI flows during the review period?   WT/TPR/M/249/Add.2 
 Page 9 
 
 
  Reply:  The main services sectors that have recei ved FDI inflows, during the period April 2007 
to July 2011, were:  
(i) financial services, including banking and insurance;  
(ii) housing;  
(iii) telecommunications;  
(iv) construction activities;  
(v) non-financial services/business services. 
Report by the Secretariat Financial services Egypt 3: 
3- Page 18 paragraph 48 
What are the main conditions for investors from Mauritius to benefit from the preferential provisions 
of the tax treaty between India and Mauritius? 
Reply:  The conditions for exemption from tax on income  from capital gains on sale of shares in 
Mauritius are given in Article 13 of the India–Mauritius Double Taxation Avoidance 
Convention (DTAC).  More details can be found at http://incometaxindia.gov.in.  
Egypt 4: 
4- Page 33 paragraph 39 
During the period April 2007-December 2009, what wa s the total number of FDI proposals of which 
the FIPB approved 949? 
Reply: During the period April 2007 to December 2009 FIPB considered 1215 proposals.  
Egypt 5: 5- Page 131 paragraph 58 
In the financial services sector what were the measures that have been adopted to encourage 
competition from the private sector?  
Reply:  In order to encourage competition from the private sector, Reserve Bank of India had 
licensed ten new private sector banks durin g 1994-1995 and two licences in 2003-2004.  
Further, in order to achieve greater competition and ensure financial inclusion, Reserve Bank 
envisages issuing licences to a few more new ba nks in the private sector.  For the purpose, 
Reserve Bank had studied the international pr actices and considered the Indian experience and 
placed a discussion paper on entry of new banks in the private sector on 11 August 2010.  The 
draft guidelines on licensing of new banks have also been released on 29 August 2011 for comments.  On examination of the feedback, and after certain vital amendments to the Banking WT/TPR/M/249/Add.2 
Page 10  
 
  Regulation Act 1949 are carried out, final gu idelines would be issued and the process for 
granting licences to new bank in the private sector would be initiated. 
Also, RBI gives a single class of banking licence to  the foreign banks which allows them to carry 
on both retail and wholesale banking. RBI has on 21 January 2011 issued a "Discussion Paper on Presence of Foreign Banks in India" inviting  comments/suggestions from all stakeholders.  
The Discussion Paper proposes po ssible autonomous liberalisation for foreign banks, permitting 
presence in India by way of wholly owned subsidiary (WOS).  It may, however, be noted that a final view on the policy based on the Discussion Paper is yet to be taken.  
Egypt 6: 6- Page 141 paragraph 65 
What are the main objectives of the Self-He lp Group-Bank Linkage Programme (SBLP), and how 
would national projects be eligible for the program?   
Reply:   A self-help group (SHG) is a registered or  unregistered group of borrowers mostly 
women having homogenous social and economi c backgrounds, voluntarily coming together to 
save regular small sums of money, mutually agreeing to contribute to a common fund and to 
meet their emergency needs on the basis of mutual help.  Also it is a group of people who pool in 
their resources to become financially stable by ta king loans from the money collected by that 
group and by making everybody of that group self-employed.  The group members use 
social/peer pressure to ensure proper end-use of credit and timely repayment on the joint 
liability group mode. 
The objectives of SHG Bank Linkage are as under: 
(i) to evolve supplementary credit strategies for meeting the credit needs of the poor by 
combining the flexibility, sensitivity and resp onsiveness of the informal credit system 
with the strength of technical and administ rative capabilities and financial resources of 
the formal credit institutions;  
(ii) to build mutual trust and confidence between the bankers and the rural poor; 
(iii) to encourage banking activity, both on the thrift  as well as credit sides, in assessment of 
the population that the formal financial institutions usually find difficult to cover. 
Egypt 7: 7- Page 151 paragraph 98 
How did the Micro Insurance Regulations 2005 affect  the micro insurance sector positively and what 
were the policies pursued to achieve this?  
Reply:  To provide a hedge against unforeseen risk s, micro insurance is widely accepted as one 
of the essential ingredients of financial inclusio n packages.  Micro insurance regulations issued 
by IRDA have provided a fillip in propagating micro insurance as a conceptual issue.  With the positive and facilitative approach adopted under the micro insurance regulations, it is expected that all insurance companies would come ou t with a progressive business approach and carry 
forward the spirit of regulations thereby extend ing insurance penetration to all segments of 
society.   WT/TPR/M/249/Add.2 
 Page 11 
 
 
  In India, a large proportion of the population lives below poverty line and therefore importance 
of micro insurance is undeniable. Most of the peop le in this segment are not only illiterate;  their 
level of  awareness about insurance is also very low. In order to facilitate penetration of micro 
insurance to the lower income segments, IRDA ha s formulated the micro insurance regulations.  
Micro Insurance Regulations 2005 provides a pla tform to distribute insurance products which 
are affordable to the rural and urban poor and to enable micro insurance to be an integral part 
of the country's wider insurance system.  
The main thrust of micro insurance regulations  is protection of low income people with 
affordable insurance products to help co pe with and recover from common risks with 
standardised popular insurance products adheri ng to certain levels of cover, premium and 
benefit standards.  These regulations have a llowed non-government organ isations (NGOs) and 
self-help groups (SHGs) to act as agents to insurance companies in marketing the micro 
insurance products and have also allowed both life and non-life insurers to promote combined 
micro insurance products. 
Life insurance sector: 
With the notification of IRDA (micro insuran ce) Regulations 2005 by the Authority, there has 
been a steady growth in the design of produc ts catering to the needs of the poor.  The 
flexibilities provided in the Regulations allow the insurers for compos ite covers or package 
products.  The insurance companies are now o ffering already approved general products as 
micro insurance products with the approval of th e Authority, if the sum assured for the product 
is within the range prescribed for micro insurance 
Non-life insurance sector: 
There are a number of products offered by all registered general insurance companies targeting 
low income segment of the population.  These include Janata Personal Accident Policy , Gramin 
Personal Accident Policy , cattle/livestock insurance etc.  Further, there are a number of 
tailor-made/group micro insuran ce policies offered by private and public insurers for the 
benefit of these segments.  Micro insurance being a low-price, high-volume business, its success 
and sustainability depends mainly on keeping the transaction costs down. 
Egypt 8: 8- Page 153 paragraph 110 
What were the main sectors driving the expansion of  the securities sector that took place since 
2009/10?  
Reply:  The Securities market in India has performed better than major markets across the 
world since April 2009. This is an evidence of th e resilience of Indian economy and reflective of 
the growth and dynamism of the Indian economy at large.  Sectors that contributed to the 
expansion of the securities market include the power sector, infrastructure, banks and financial 
institution in 2009-10 and coal sector in 2010-11. 
Telecommunications services 
Egypt 9: 9- Page 160 paragraph 130 
How is the development of maintenance of ru ral fixed-line and mobile telecom and broadband 
services subsidized and what is the percentage of subsidization?  WT/TPR/M/249/Add.2 
Page 12  
 
  Reply:  There is no subsidy to rural fixed line an d mobile telecom and broadband services except 
as provided under Universal Service Obligation F und Scheme.  Under USOF scheme, subsidy is 
arrived at based on competitive bidding among eligible operators.  
Transport – Maritime transport – Shipping  Egypt 10: 
10- Page 163 paragraph 138 
What are the conditions and requirements for i ssuance of "no objection" certificate required for 
foreign flag vessels in maritime transport and for operating flights in air transport?   
Reply:  The Director General of Shipping has been  empowered to issue licenses for Indian ships 
as well as for foreign ships. A General License  is issued under section 406 of the Merchant 
Shipping Act 1958 for Indian vessels and vessels chartered by a citizen of India or a company, 
or a co-operative society.  Foreign flag vessels are granted a specified period license (SPL) under section 406/407 ibid in the coastal trade of India s ubject to no-objection Certificate issued by the 
Indian National Shipowners' Association (I NSA).  These licenses are granted under these 
sections and they shall be in such form and sh all be valid for such period as prescribed and 
further shall be subject to such conditions as specified by the Director General of Shipping, as 
per his guidelines issued vide SD Circular numbe rs 2/2002 and 2/2007 as amended from time to 
time on the subject.  
Largely, the procedure for issue of such licens es are similar for Indian flag vessels as well as 
foreign flag vessels except to the ex tent that in the case of latter.   
(i) A certificate from INSA is required.   
(ii) Besides, such licenses for foreign flag vessel s are limited period – a specific to the 
contract tenure involved.  
(iii) There are some variations in terms of fee st ructure prescribed for such licenses for 
foreign flag vessels vis-à-vis  Indian flag.  This is reflected in the SD Circular number 2 of 
2010 issued vide No.SD-13/POL(3)/97 dated 4.2.2010. 
(iv) In the case of foreign flag vessels such licen ses are issued up to the time limit of a 
statutory certificate such as registry certific ate, international load line certificate, 
International oil pollution certificate, car go sea safety construction certificate etc. 
The MS Act, 1958, reserves cabotage to Indian flag vessels (Part XIV).  However foreign flag 
vessels are chartered if no suitable Indian flag vessels are available.  For this purpose 
no-objection certificates are required to be ta ken from the Indian National Shipowners' 
Association under the guidelines issued by the DGS,  as amended from time to time.  A foreign 
flag carrier is allowed to deliver cargo to several Indian ports. 
Egypt 11: 11- Page 164 paragraph 141 
Would India elaborate more on the incentives given  to registered ship-owners in India?  
Reply:  Some of the incentives given to registered ship-owners in India are:  WT/TPR/M/249/Add.2 
 Page 13 
 
 
  (i) The Cargo Reservation Policy in India is for Indian flag vessels.  As per the DG 
Shipping circular (2010), the existing basis fo r according cargo preference is as follows: 
Right of First Refusal:  Indian Flag vessels (regardless of country of built – India or 
foreign). 
Right of Second Refusal:  BBCD vessels (ba reboat charter cum demise);  only after 
demise of charter period, the vessel may fly Indian Flag hence till that time, BBCD 
vessels have only Second Right of Refusal. 
Right of Third Refusal:  Indian built foreign owned (foreign flag) vessel. 
Last Right of Refusal:  any foreign flag vessel. 
(ii) Tonnage Tax Scheme which reduces effective rate of tax offering companies a fixed, low 
rate of tax based on a "notional Income" concept. 
Egypt 12: 
12- Page 164 paragraph 143 
What are the reasons behind increased pre-berthi ng waiting period despite India's efforts towards 
enhancing efficiency of ports?  Also what are the steps taking in this regard to lessen disparity 
between major ports?   
Reply:  There is delay in evacuation of cargo an d decrease in ship productivity rate.  Besides, 
there are inadequacies of proper storage facilities and non-availability of draft.  Due to these 
constraints the modern large size vessels find it difficult to call at the Indian ports.  This 
undermines the competitiveness of Indian ports.  Besides, there are issues of congestion in the 
roads connecting to the ports with national highways and poor rail road connectivity which leads to the poor evacuation of cargo.  Most of  the ports also face limitation of draft to handle 
bigger vessels.  Major ports have taken steps to increase draft of channels through capital 
dredging. 
Egypt 13: 
13- Page 164 paragraph 144 
What are the conditions specified for foreign investment?  How often are they modified? Does 
modification of these conditions create some ki nd of uncertainty among foreign investors in port 
administration services?   
Reply: Foreign investment is allowed in port  operations and not in port administration 
(management), subject to the guidelines of public private partnership (PPP) announced by the 
Government of India for major ports.  Foreign direct investment up to 100% is permitted for 
construction and maintenance of ports and harbours.  
The PPP guidelines are subject to review and mo difications in the future depending upon the 
changes in the port sector and economic condition of  the country. This also applies in the case of 
foreign investment in the port operations.  WT/TPR/M/249/Add.2 
Page 14  
 
  Egypt 14: 
14- Page 165 paragraph 146 
The Secretariat Report indicated that the Ministry of Shipping drafted the Major Ports Regulatory 
Authority Bill 2011 to establish the Major Ports Re gulatory Authority (MPRA).  Could you provide a 
brief on the content of this bill?  
Reply:  The Major Ports Regulatory Authority Bill when enacted will provide for the 
establishment of Regulatory Authorities to regu late the facilities and services provided at the 
ports and to monitor the perfor mance standards of port facilit ies and services and for matters 
connected therewith or incidental thereto.  The Bill for the Major Ports Regulatory Authority is 
in the draft stage and the contents of the Bill are yet to be firmed up. 
Egypt 15: 
15- Page 165 paragraph 150 
What are the current ongoing developments in overland transport?  Reply:  Transportation infrastructure is very critic al for sustaining long term growth of the 
Indian economy.  
Going forward, huge investments are required in the road sector to expand the road network 
through development of new roads and widening of the existing roads.  Considering the size of 
the investment it will be a huge burden on the gov ernment's purse.  Hence, active participation 
from the private sector is a must to drive the growth in the road sector.  Robust policies setting out clear guidelines to attract greater particip ation from the private sector players have been 
put in place.  Nearly 27,000 km of highways w ill be in the next few years, bid out under the PPP 
mode, mostly on international competitive bid basis.  
As far as developments in rail transportation in India is concerned, track length of 18,559 km 
has been electrified and around 18,172 km has been doubled.  Currently a large number of new 
line doubling, gauge conversion and electrifi cation projects are in progress which would 
improve the rail network further.  Developments  also include induction of new and powerful 
locomotives, better and efficient maintenance practices for track and rolling stock, introduction 
of better signalling and communication systems.  India is also developing the western and 
eastern dedicated freight corrido rs for fast and efficient freight movement.  Studies are also 
being conducted for high speed rail corridors along with passenger intensive corridors. 
Railways have introduced diversified services so  as to cater to the various segments of the 
society, balancing its social commitments with it s commercial functions.  In the period 2002-03 
to 2010-11 freight traffic on I ndian railways have increased with  an average growth rate of 
7.23% per annum. Indian Railways has been ma king efforts to maximise revenue through 
freight loading. In order to do this a number of initiatives have been taken.  
Transport – Air transport Egypt 16: 
16- Page168 Paragraph 163 
The Secretariat Report indicated that currently, the fees are levied at 13 major airports including 
Delhi.  They are levied on all (international and domestic) departing flights and their rates vary from  WT/TPR/M/249/Add.2 
 Page 15 
 
 
  one airport to another.  On what basis is the vari ation in the fees levied on departing flights between 
different airports?  
Reply:  The User Development Fee (UDF) charges levied at major airports have been approved 
by the Airports Economic Regulatory Authority of India. In other cases, Ministry of Civil 
Aviation has approved the charges.  The UDF char ges are levied to bridge the revenue gap of a 
particular airport hence there are different charges for airports depending upon the 
profitability, traffic, income and expenditure et c.  The development fee (DF) was approved for 
bridging the resource gap in creation of capital asset, i.e. new terminal building at an airport. The rate depends upon the borrowing capacity of  the airport and shortfall in project funding. 
Transport – Overland transpor t – Road transport  
Egypt 17: 
17- Page 169 paragraph 167 
The Secretariat Report indicated that India has been  making efforts to improve its infrastructure 
through the formulation of policies, plans, and pr ojects. India introduced a new national permit 
system in 2010 to render inter-state freight tra ffic more efficient. Elaborate on these policies, plans, 
and projects targeted to improve infrastructure?  How would the introduction of this system enhance 
efficiency of inter-state freight traffic?  
Reply:  The details of the new National Permit  Scheme which is in operation since 2010 can be 
obtained from the following website http://morth.nic.in/. 
Egypt 18: 18- Page 169 paragraph 168 
What are the stages of the seven-phase National Highways Development Projects (NHDP) that was 
launched in 1998, and which phases have been concluded?   
Reply:  A. Phase I mainly involves widening (to four la nes) and upgrading of 7,498 km of the 
national highway network and has four component packages: 
1. Highway network linking the four metropolitan cities in India i.e. 
Delhi-Mumbai-Chennai-Kolkata, covering a length of 5,846 km, popularly known as the Golden Quadrilateral (GQ) project; 
2. Highways along the North-South (NS) and East-West (EW) corridors, covering a 
length of 981 km; 
3. Port connectivity projects covering a length of 356 km;  and  
4. Other highway projects, covering a length of 315 km.  
4-laning of the GQ has almost been completed. 
B. Phase-II involves widening and improvement of the NS-EW corridors (not covered 
under Phase-I) covering a distance of 6,647 km , besides providing connectivity to major WT/TPR/M/249/Add.2 
Page 16  
 
  ports on the east and west coasts of India and some other projects. This includes 
6,161 km of NS-EW corridors and 486 km of other highways.  Implementation of this 
phase is under process. 
C. Phase III –involves upgradation of 12,109 km (mainly 4-laning) of high density national 
highways, through the build, operate and transfer (BOT) mode at a cost of Rs 80,626 Crore. The project consists of stretches of National Highways carrying high 
volume of traffic, connecting state capita ls with the NHDP network under Phases I and 
II and providing connectivity to places of eco nomic, commercial and tourist importance, 
with a view to providing balanced and equitable distribution of the improved/widened highways network throughout the country . Implementation of this phase is under 
process. 
D. NHDP-Phase IV envisages upgrading of 20, 000 km of such highways into two-lane 
highways, at an indicative cost of Rs 27,800 Cr ore (US$5.6 billion).  This will ensure that 
their capacity, speed and safety match mi nimum benchmarks for national highways. 
The Government has already approved strengt hening of 5,000 km to two-lane paved 
shoulders on BOT (toll/annuity) under NHDP-IV A, at a cost of Rs 6,950 Crore 
(US$1.4 billion). 
E. Under NHDP Phase-V, six-laning of 6500 km four-lane highways comprising the GQ 
and certain other high density stretches, will be implemented on BOT basis at an estimated cost of Rs 41,210 Crore (US $8.2 billion).  These corridors have been 
four-laned as part of the GQ in Phase-I of NHDP.  Of the 6,500 km proposed under 
NHDP-V, about 5,700 km would be taken up in the GQ and the balance 800 km would 
be selected on the basis of predefined eligibilit y criteria.  Implementation of this phase is 
under process. 
F. Phase VI (1000 km):  With the growing importance of urban centres of India, 
particularly those located within a few hundred  kilometers of each other, expressways 
would be both viable and beneficial.  The Government has approved 1,000 km of 
expressways to be developed on a BOT basis, at an indicative cost of Rs 16,680 Crore 
(US$3.3 billion).  These expressways wo uld be constructed on new alignments. 
Implementation of this phase is under process. 
G. Phase VII (700 km): The development of ring  roads, bypasses, grade separators and 
service roads are considered necessary for full utilisation of highway capacity as well as 
for enhanced safety and efficiency.  For this, a programme for development of such 
features at an indicative cost of Rs 16,680 Crore (US$3.3 billion) has been approved by the Government.  Apart from the high dens ity corridors, a substantial part of the 
National Highways network would al so require development during the 12
th Plan 
period.  These sections are characterised by low density of traffic. Some of these stretches fall in backward and inaccessible ar eas and others are of strategic importance. 
The development of these categories of National Highways would be carried out 
primarily through budgetary resources.  Implem entation of this phase is under process. 
Tourism Egypt 19: 19- Page 177 paragraph 191 
In 2010, India estimated a shortage of some 150,000 hotel rooms, in particular in the budget 
category, how was this number calculated?  WT/TPR/M/249/Add.2 
 Page 17 
 
 
  Reply:  As per the study of Federation of Indian Chamber of Commerce and Industry (FICCI) 
2007 on "Investment Opportunities in Hotel Infr astructure in India", the demand supply gap of 
hotel rooms in India was 1,50,000. 
Egypt 20: 20- Page 178 paragraph 192 
What are the policies set to increase FDI inflows to the tourism sector, if any?  
Reply: FDI up to 100% is permitted by Govt. of India on the automatic route 
in hotel and tourism sector. 
EUROPEAN UNION Follow-up questions 
EU FQ 1: 
1. Question 9 follow-up: According to India's repli es, India continues to apply current and capital 
account restrictions. Could India give a detailed overview of the restrictions applicable and point out 
how it ensures compliance with Article XI of GATS? 
Reply:  As regards trade, it is observed that trade transactions are current account transactions 
and the regulations for current account transact ions under Foreign Exchange Management Act, 
1999 are framed/made by Government of India (G oI) which are notified by GoI under Foreign 
Exchange Management Act (FEMA) 1999 vide Foreign Exchange Management (Current 
Account Transactions) Rules 2000 dated 3 May 2000,  which are available in public domain (on 
www.rbi.org.in).  
India is not fully convertible on capital account hence suitable restrictions are placed by RBI in 
consultation with GoI with regard to capital a ccount transactions.  These are available in public 
domain (on www.rbi.org.in) in the form of FE MA 1999 and the various rules and regulations 
and notifications framed under FEMA 1999. 
The EU's original question 9: C ould India provide an overview of these conditions, including on free 
repatriation of profits and divestment of FDI (as ref erred to in paragraph 38 of Secretariats report) 
and its plans for future, if any? 
India's reply: India is fully convertible on the current account since 1994. However certain 
quantitative restrictions have been placed on small list of current account transactions.  Repatriation 
of profits in the form of dividend payments on foreign investments in India are treated as current 
account transactions and as such  there are no restrictions on remittance of the same subject to 
payment of applicable taxes and tax laws in the ma tter. As regards capital account convertibility, 
India has followed a gradualist approach and capita l controls are being liberalized in a calibrated 
manner. Foreign Investment under th e Foreign Direct Investment (FD I) route is very liberal wherein 
FDI is allowed in almost all sectors (barring a fe w sensitive sectors) under the 100% automatic route 
for FDI (subject to the reporting requirements, pricing guidelines and other terms and conditions 
stipulated under the relevant FEMA regulations).  Further transfer of shares under the FDI scheme 
from non residents to residents or divestment of sha res / FDI investment by non-resident investors is 
also under the automatic route subject to the respective reporting requirements, pricing guidelines 
and other relevant terms and conditions under the extant FEMA regulations.  WT/TPR/M/249/Add.2 
Page 18  
 
  EU FQ 2: 
2. Question 20 follow-up: Could India give a short overview about the procedure for registering a 
branch office with Registrar of Companies and how th is differs from procedures for incorporation? 
Reply:   Difference between this registration and incorporation: 
(a) A company on incorporation comes into bein g a separate legal person having a separate 
legal identity and perpetual succession. 
(b) After incorporation it can die by following  a legal process of winding up only as 
prescribed under the Act. 
(c) Whereas, a registration of a branch office in India by a foreign company is not 
incorporation as no separate legal entity come s into existence by such registration but is 
only an intimation of establishment of a place of business in India by a legal person 
already incorporated out of India. 
(d) Similarly, for closure of a branch office,  no procedure of winding up needs to be 
followed. Only intimation on the prescribed form is enough.  
The provisions regarding establishment of place(s) of business in India by the Companies 
incorporated outside India are given in sections 591 to 602 of the Companies Act 1956, which 
may be viewed on http://www.mca.gov.in/M inistry/pdf/Companies_Ac t_1956_13jun2011.pdf.  
In view of these provisions, a foreign company can get a branch office registered with the Registrar of Companies.  An e-Form 44 (docum ents delivered for registration by a foreign 
company) is required to be filed by authorized representative of the foreign company.  This 
form is available on http://www.mca.gov.in/MCA21/RegisterNewComp.html.  The office of the 
Registrar of Companies, Delhi is the Ce ntral Registry office for this purpose.  
The EU's original question 20: Could India c onfirm whether a branch of a foreign company is 
allowed to operate without incorporation? 
India's reply: Branch Office has to register with the Registrar of Companies. 
EU FQ 3: 
3. Question 24 follow-up: Could India confirm t hat the FDI policy does not restrict foreign ownership 
in legal services, auditing services and news agency services?  Furthermore, could India confirm that 
the cross-border provision of news age ncy services is allowed in India?  
Reply:   Any investment, including foreign investment , is subject to applicable laws/sectoral 
rules/regulations/security conditions, which may contain restrictions.  Thus, the FDI policy should also be read in consistence with the a pplicable laws/sectoral rules/regulations/security 
conditions.  
The EU's original question 24: C ould India confirm that the list in table II.8 covers all sectors where 
foreign direct investment is prohibited? In particular, c ould India confirm that FD I is allowed in legal 
services, auditing and news agency services? 
India's reply: The list in table II.8 covers sectors in which FDI is  prohibited under the FDI policy. 
However, any investment, including foreign invest ment, is subject to applicable laws/sectoral 
rules/regulations/security conditions , which may contain restrictions.   WT/TPR/M/249/Add.2 
 Page 19 
 
 
  EU FQ 4: 
4. Question 25 follow-up: Could India confirm t hat citizens of WTO Members with double nationality, 
where one nationality is that of a neighbour to which restrictions apply, and juridical persons 
incorporated in these countries, but owned by persons of other WTO Members are not subject to 
investment restrictions? 
Reply:  The extant FDI policy is in line with the ob ligations arising out of the GATS read along 
with the flexibilities provided in the GATS itself.   
The EU's original question 25: Could India cl arify how its GATS commitments are honoured for 
citizens of WTO Members, including those with doubl e nationality where one nationality is that of a 
neighbour to which the restrictions apply and for ju ridical persons incorporated in these countries, 
but owned by other WTO Members' persons? 
India's reply: The policy on FDI has been steadily li beralised and is reviewed from time to time, with 
a view to increasing its investor-friendliness. In keeping with this thrust towards an increasingly open 
policy environment, country-specific restrictions on investment, which had earlier found a place 
under the policy on FDI, have also b een gradually reduced over time.  
EU FQ 5: 
5. Question 26 follow-up: Can India inform the WT O Members which steps, if any, it is taking to 
amend the ICAI Act and regulations framed thereunder in order to allow locally incorporated foreign 
firms to use their international brand (network) names, sign audits and have freely chosen partners? 
Reply:   The Institute of Chartered Accountants of India (ICAI) has been pursuing the policy of 
recognition of membership qualification of professionals of other Institutes on reciprocal basis 
as per section 29 of the Chartered Accountants Ac t 1949.  As such, presently there is no move to 
amend the Act and regulations framed thereunder to  allow locally incorporated foreign firms to 
use their international brand (network) names, sign audits and have freely chosen partners. 
The EU's original question 26: As for accounting services, what steps are being taken to allow Indian 
companies to have their audit reports signed by  locally incorporated foreign firms using 
internationally recognised names, as well as to e nd the restrictions on the number of partners? By 
when can this be expected? 
India's reply: The existing ICAI (Institute of C hartered Accountants of India) Act and regulations 
framed thereunder regulate the profession of Chartered  Accountants which inter alia also includes 
the operation of Chartered Accountancy firms in India including the manner of registration and the name of such firms which are approved by ICAI. 
EU FQ 6: 
6. Question 28 follow-up: According to Indian replies the new Post Office Amendment Bill is 
currently under consideration in the Parliament. Coul d India give an overview of the proposal made 
by the Government in regard to conditions applyi ng to foreign service providers and in particular if 
any equity cap and restrictions on the scope of business have been proposed?  
Reply:   As mentioned earlier the Post Office Bill is presently under consideration of the 
Government, the Bill will be in public domain once it is introduced in the Parliament.   WT/TPR/M/249/Add.2 
Page 20  
 
  The EU's original question 28: As regards posta l services, we note that a Postal Bill has been 
prepared by Indian government. Could India please give an overview of any restrictions reducing the 
current market access/scope of business and any ne w requirements and obligations for foreign postal 
or courier companies?  
India's reply: The Post Office Amendment Bill is  presently under consideration of the Government 
and has yet not been introduced in the Parliament. 
EU FQ 7: 7. Question 37 follow-up: as regar ds Indian system of duties and charges on imports (other than 
tariffs) in general, does India plan to simplify  the current system and is there any intention to 
harmonise the system in all Indian states?  
Reply:  Simplification of the Indian system of duti es and charges on imports (other than tariffs) 
is linked to the reforms of domestic internal t axes, which is an ongoing process.  The proposed 
introduction of GST (goods and service tax) is geared towards simplification and harmonisation 
of indirect taxes across the states.  
The EU's original question 37: When does India plan  to further reduce tariffs  in these sectors in order 
to bring the stimulus of international comp etition to these parts of the Indian economy? 
India's reply: India has autonomously reduced its tariffs from time to time on a number of 
agricultural products, as part of  its domestic policy aimed, inter alia, at domestic supply 
management, and in keeping with its con tinuing commitment to trade openness. 
EU FQ 8: 8. Question 55 follow-up: Could India specify whet her the shelf-life requirement on imports of food 
products is still applicable accord ing to the new regulations?  
Reply:  Yes, the shelf-life requirement on imports of food products is still applicable. The EU's original question 55: Could India please provide more details on this process of moving 
from a multi-agency to centralised systems (e.g. tim elines, which agencies will be brought under the 
FSSAI)? Would this also reduce the time needed fo r custom clearance of goods (documentary, identity 
and physical checks)? Could India provide more inform ation on the timelines of the custom clearance 
process? Could India clarify whether sufficient capacity  (staff, storage capacity etc.) has been put in 
place for ensuring no unnecessary delays at the border during custom clearance,  in particular during 
the process of moving from a multi-agency to centralised systems? 
India's reply: The previous eight Food laws as men tioned in the IInd Schedule of FSS Act, 2006 stand 
repealed with effect from 05th August 2011. Th is had shifted regulatory control from multiple 
agencies to a single agency in the country. This would lead to reduction in time for obtaining licences 
and getting clearances for imports.   
EU FQ 9: 9. Question 67 follow-up: Could India elaborate also  on its intention to create new Special Economic 
Zones?  
Reply:   The statute and the Rules for operating and new SEZs are well laid down in the SEZ 
Act 2005 and the SEZ Rules 2006, as amended. A special economic zone may be established  WT/TPR/M/249/Add.2 
 Page 21 
 
 
  either jointly or severally by the Central Gove rnment, State Governments or any person for 
manufacture of goods or rendering services or for both or as a free trade and warehousing zone.  
Such proposals duly recommended by the concerned State Government are considered by the Board of Approval for SEZs.  SEZ being set up under the SEZ Act 2005 are primarily private 
investment driven.  
The EU's original question 67: C ould India provide information on the "free trade zones": Are these 
the same as the "special economic zones describe d in the report? If they are not, please describe 
eligibility criteria for a company to establish itself in a free trade zone, how many and what type of 
companies are located in these zones, what type  of incentives are provided to the companies 
concerned and whether those incentives can be quantified. 
India's reply: Facilities available to industries establ ished in a Special Economic Zone are given in 
SEZ Act, 2005 and SEZ Rules, 2006.  SEZ Act and Rules are available on website 
www.sezindia.nic.in. 
EU FQ 10: 
10. Questions 89-92 follow-up:  
a) India informs that General Financial Rul es (GSF) govern the procurement by all Central 
Ministries. Could India provide information whethe r procurement is governed by GSF also in some 
states?  
b) Could India elaborate on whether it has the in tention to unify/harmonise the system of public 
procurement on central and state level? 
Reply (a) and (b): Chapter 5 and 6 of the General Financial Rules (GFR) 2005 contains general 
rules applicable to all central government mini stries or departments regarding procurement of 
goods, engagement of consultants and outsourcing of  services.  Detailed instructions relating to 
the procurement of goods can be issued by the procuring ministries/departments in conformity 
with the general rules contained in this chapter.  
Financial powers are decentralised and it is for each state government to establish its own rules 
and regulations keeping in mind the requireme nts of transparency, non-discrimination and 
accountability. Some of the states like Tamil Nadu and Karnataka have passed laws to regulate 
public procurement, on the lines of provisions of GFR.  Establishment of a legislative framework for public procurement is under consideration of the government of India. 
EU FQ11: 11. Question 110 follow-up: does the system of the GIs protection ensure the same protection in all 
states of India or does the approach to the GIs protection differ in different Indian states? 
Reply:  The system of GIs protection ensures the same protection in all states of India.  The EU's original question 84: C ould India provide details of the notification made by the Central 
Government in the Official Gazette to grant hi gher protection to wines and spirits? Does India 
envisage to make notifications in the Official Gazette for other goods, and if so, which ones?  
India's reply: The notification states that: "Wherea s sub-section (2) of Section 22 of Geographical 
Indication of Goods (Registra tion and Protection) Act, 1999 provides for additional protection for 
certain goods or class or classes of goods as notified; WT/TPR/M/249/Add.2 
Page 22  
 
  And whereas, the Central Government is satisfied that a notification extending additional protection 
as provided in sub-section (3) of Section 22 of the Geographical Indication of Goods (Registration 
and Protection) Act, 1999 is necessary. 
Now, therefore, in exercise of th e powers conferred by sub-section (2) of Section 22 of the 
Geographical Indication of Goods (Registration an d Protection) Act, 1999, the list of the goods 
specified in the Schedule are extended additional protec tion under the sub-section (3) of Section 22 of 
the said Act." 
At present there is no proposal for extending the lis t of goods for providing additional protection.  
EU FQ 12: 12. Question 115 follow-up: Could India provide fu rther details on the mechanisms used by the 
central government to ensure that all states apply th e basic level of IPR enforcement all over India?  
Reply:  All states are applying the basic level of IPR enforcement in India.  The EU's original question 115: How is India striking this balance, including stronger enforcement of 
IPR laws and engagement in WIPO? India's reply: The enforcement measures adopted by  India are in compliance with the TRIPS 
Agreement. There is no obligation to provide str onger enforcement of IPR Laws than those mandated 
by TRIPS. 
India has strong enforcement clauses in the domestic laws which are TRIPS compliant. 
EU FQ 13: 13. Questions 117-119 follow-up:  
a)  Several Members have asked India about th e ongoing reforms in the banking sector and in 
particular about the two ongoing consultations, as regards the p resence of foreign banks in India and 
the conditions for new banking licences in India. It is understandable that the final decisions have not 
yet been taken as regard the outcome of these re forms, however, the EU would like to here the 
Government of India's clarification behind the cu rrent proposals. In this regard, and without 
prejudice to the ongoing reform outcome, could India confirm that no restrictions on local branch 
(geographical office, including back office) expansion,  i.e. no quota nor restrictions on localisation 
are currently considered in new guidelines for incorporated wholly owned subsidiaries? 
Reply:   The Discussion Paper on Presence of Forei gn Banks in India has proposed certain 
restrictions on branch expansion for locally  incorporated wholly owned subsidiaries, viz.: 
 With a view to creating an environment for encouraging foreign banks to set up WOS, a 
less restrictive branch expansion policy, thou gh not at par with domestic banks may be 
envisaged.  Accordingly, differentially favour able treatment to WOS of foreign banks as 
compared to the branches of other foreign banks may be put in place on the grounds of regulatory comfort that subsidiaries would provide.  
 Therefore, with a view to incentivise setting up of WOS/conversion of foreign bank 
branches into WOS, it is proposed that th e branch expansion policy as applicable to 
domestic banks as on 1 January 2010, may be  extended to WOS of foreign banks also.  
This may mean that the WOS would be enabled to open branches in Tier 3 to 6 centres  WT/TPR/M/249/Add.2 
 Page 23 
 
 
  except at a few locations considered sensiti ve on security considerations.  Their 
application for setting up branches in Tier 1 and Tier 2 centres would also be dealt with 
in a manner and on criteria similar to  those applied to domestic banks.  
 The expansion of the branch net work of forei gn banks in India – both existing and new 
entrants – who are present in branch mode would be strictly under the WTO 
commitments of 12 branches or as may be modified from time to time.   
b) The Reserve Bank of India has made it clear that it prefers foreign banks to subsidiarize instead of 
branching. In this regard, does RBI intend to c ontinue allowing branches of foreign banks to be 
established, or does India foresee an article XXI  procedure to withdraw the commitments? 
Reply:  Certain categories of banks as mentione d in para 6.1.1 of the Discussion Paper may be 
mandated entry in India only by way of setting  up a wholly owned subsidiary (WOS). Foreign 
banks in whose case the conditions as mentioned in the said Para do not apply may opt for a 
branch or WOS on entry in accordance with the single mode of presence requirement.  
However, the Discussion Paper has stated that it would be mandatory for banks which opt for 
branch mode of presence to convert themselves into WOS if:  
(i) any of the conditionalities as mentioned in Para 6.1.1 materialise in the judgement of 
Reserve Bank of India;  or  
(ii) they become systemically important by virtue  of their balance sheet  size.  Foreign bank 
branches would be considered to be systemic ally important once their assets (on balance 
sheet and credit equivalent of off-balance shee t items) become 0.25% of the total assets 
(inclusive of the credit equivalent of off-balance sheet items) of all scheduled commercial 
banks in India as on March 31 of the preceding year. 
Therefore, an article XXI procedure to withdraw the commitments is not foreseen. c) Could India explain how the policies of allowing 100% or wholly owned subsidiaries  of foreign 
banks relates to the 74% equity cap for foreign shareholding in any Indian bank and the proposed 
49% equity cap for new banks. In this regard, could RBI explain: 
o How is a new Indian bank defined: would it cover subsidiaries of foreign banks both when 
converting from branch or when establishing anew, banks formed as a result of mergers or 
acquisitions, or only totally newly established banks? 
o Is it ensured that wholly owned subsidiaries w ill not be forced to divest 26% to comply with 
the equity cap? 
o Is it ensured that a new subsidiary of forei gn bank will not be treated as a new bank, and 
hence the new proposed 49% equity cap applied for 5 years? 
Reply:  
 The 74% equity cap for foreign shareholding is exclusively for private sector banks and 
not for foreign banks.  A private sector bank would mean a banking company 
incorporated in India under the Companies Act 1956 and promoted by entities/groups 
that are owned and controlled by resident Indians. 
 As per the Discussion Paper on Presence of Forei gn Banks in India, the issue of dilution 
or listing of WOS of foreign banks in I ndia and allowing mergers and acquisitions of WT/TPR/M/249/Add.2 
Page 24  
 
  Indian private sector banks by foreign banks or their WOS may be considered after a 
review is made of experience gained on the functioning of WOS of foreign banks in India.  
 A final policy view on "Discussion Paper on Presence of Foreign Banks" is yet to be 
taken. Incidentally, 49% equity cap for five  years for new banks has not been discussed 
in this discussion paper. 
EU FQ 14: 14. Question 124 follow-up: 
a) Could India confirm that foreign satellite operators are not allowed to sell directly to 
telecommunications operators? 
b) Could India explain the reasons for not allowing resale of telecommunications services? 
c) Without prejudice to the outcome of current re form, could India indicate, if the Government of 
India has proposed to change both of these issues  in the ongoing discussions on the National Telecom 
Policy 2011? 
Reply: As far as telecom sector is concerned, this is governed by SATCOM Policy which is as 
below: 
"The SATCOM policy shall provide for users to avail of transponder capacity from 
both domestic/foreign satellites.  However, the same has to be in consultation with the 
Department of Space."   
The National Telecom Policy is in the process of consultation with various stakeholders.  All 
relevant issues related to telecom sector in In dia would be looked into while formulating 
National Telecom Policy 2011. 
The EU's original question 124: Could India confirm that these restrictions are in place and in 
conformity with its GATS commitments? 
India's reply: Para 125 of the Secretariat Report clea rly explains the cap of 10% in respect of cross 
holding among licensees in same service areas. It  has no linkage with Indian or foreign equity. 
Additional questions 
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES 
(ii) Trade policy formulation, implementation and objectives 
EU 137:  According to our information, foreign compani es are confronted sometimes with the unclear 
requirements and procedures on registration/ cert ification of relevant document regarding the 
Permanent Account Number.  
1. Could India provide practical details (e.g. reference to such  requirement, relevant authorities 
involved in certification of documents, pro cedures) related to this requirement?    WT/TPR/M/249/Add.2 
 Page 25 
 
 
  Reply:  In case of foreign companies the follo wing documents are required for the purpose of 
issuing of permanent account number (PAN):   
Proof of identify:   
Copy of registration certificate issued in India or of approval granted to set up office in India by 
Indian authorities.  
Or  
Copy of Certificate of Registration issued in  the country where the applicant is located, duly 
attested by "Apostille" (in respect of countries which are signatories to the Hague Apostille 
Convention of 1961) or by Indian embassy/hig h commission or consulate in the country where 
the applicant is located. 
Proof of address:  
Copy of registration certificate issued in India or of approval granted to set up office in India by 
Indian Authorities.  
Or  Copy of Certificate of Registration issued in  the country where the applicant is located, duly 
attested by "Apostille" (in respect of countries which are signatories to the Hague Apostille 
Convention of 1961) or by Indian embassy/hig h commission or consulate in the country where 
the applicant is located. 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(2) MEASURES DIRECTLY AFFECTING IMPORTS (iv) Tariffs 
WTO Secretariat's report, page 51. para. 44 
EU 138, 139:  According to the Secretariat's report: "Since 2004, an education cess has been  charged on imports at 
the rate of 2% on all aggregate customs duties (excluding safeguard, countervailing or anti-dumping 
duties if applicable).  The secondary and higher educ ation cess of 1%, which entered into force 
through the Finance Bill of 2007, is also levied on all imports.  This cess is calculated on the 
aggregate value of all excise duties (including the ad ditional and the special duties or any other duty 
or excise), but excluding the education cess and safe guard, countervailing or an anti-dumping duty if 
applicable." 
2. Could India confirm that the mentioned cesses are also applicable to domestic production? 
Reply:  Yes, it is confirmed that these cesses are also applicable to goods produced domestically. 
3. Could India also indicate whether it has carried  out any comparative study as to the impact 
of such domestic taxes and the impact of the charges affecting imports? 
Reply:  No such study has been conducted by the Government of India.  WT/TPR/M/249/Add.2 
Page 26  
 
  (vi) Import prohibitions, rest rictions, and licensing 
(c) Import quotas 
WTO Secretariat's report, page 57, par. 64 
EU 140: 
The Secretariat's report informs that "Since the rem oval of most quantitative restrictions on imports 
in 2001, a mechanism has been set up to monitor impor ts of items considered to be sensitive. There 
are currently some 415 sensitive items, compared with 300 in 2007. /…/" 
4. Could India explain the reasons for increasing the number of items under this mechanism and 
also provide information on whether it plans to reduce the number of sensitive items in the 
future?  
Reply: Monitoring of imports of sensitive items is being done on monthly basis.  Any item is 
included in the list on need based basis where it is felt that import of such item should be 
monitored.  
(ix) Technical regulations and standards 
WTO Secretariat's report, page 69. para. 105 
EU 141, 142, 143, 144: 
The Secretariat's report states that in India so me 81 products are subject to mandatory certification 
and mandatory BIS certification mark. 
5. Could India explain which were the criteria u sed by the Government to select the products 
subject to mandatory certification under BIS rules? 
Reply:  The need for technical regulations is de termined by the Central Government keeping in 
view the public interest.  
6. Could India explain if for each product a co mprehensive impact assessme nt was carried out 
including an assessment of the impact compulso ry certification has on international trade?  
Reply:  All relevant aspects are taken into a ccount before adopting mandatory certification of 
products under BIS. 
7. Could India explain if a proportionality check is syst ematically carried out in order to ensure 
that:  
a) technical regulations are not more trade -restrictive than necessary to fulfil a legitimate 
objective, taking account of the risks non-fulfilment would create (Article 2.2 of the TBT Agreement)?  
Reply:  None of our technical regulations are more trade-restrictive than necessary to fulfil a 
legitimate objective. 
b) that conformity assessment procedures are not  more strict or applied more strictly than is 
necessary to give the importing Member adequate confidence that products conform with the 
applicable technical regulations  or standards, taking account of the risks non-conformity 
would create (Article 5.1.2 of the TBT Agreement)?   WT/TPR/M/249/Add.2 
 Page 27 
 
 
  Reply: None of our conformity assessment proc edures are more strict or applied more strictly 
than is necessary. 
8. Could India clarify on which groun ds in addition to third party testing carried out in India 
laboratories, information on the production pr ocess is required (including installed capacity 
production and prices) to obtain BIS licence?  
Reply: Information on production process is  required to judge the competency of a 
manufacturer to produce products as per the relevant Indian standards.  Information on 
installed capacity and prices helps in prep aring the scheme of testing and inspection. 
WTO Secretariat's report, page 69. para. 106 EU 145, 146, 147:  
The WTO Secretariat's report states that "/…/ Fees under the Foreign Manufacturers Certification 
Scheme, in place since 1999, are:  Rs 1,000 for th e application, US$300 for processing, US$2,000 for 
marking, and a unit rate fee, which varies according to the product/…/". 
9. Could India explain if the same fee structure applies also to local manufacturers? 
Reply:  The applicable fees under the Foreign Manufacturers Certification Scheme are 
equitable to those applicable to local manufacturers.  
10. Could India clarify if the marking fee of US$2,000 is a one time fee or an annual fee? 
Reply:  Marking fee of US$2000 is charged annually. 
11. Could  India justify on whic h grounds in addition to the application fee, the processing fee 
and the marking fee a unit fee (per product ma rked) is still applied?. How does India see the 
unit fee in light of GATT and TBT Agreement?  
Reply: Various fees being charged are based on the cost of operations.  The fee is equitable in 
line with TBT Agreement. 
IV. TRADE POLICIES BY SELECTED SECTOR 
(2) Agriculture 
WTO Secretariat's report, page 130, para. 18-19  
EU 148:  
The Secretariat's report states that "According to India's latest notific ation to the WTO, submitted in 
January 2011, which covers the period up to 2007/08, ta riff quotas continue to be allocated on a pro 
rata basis by the Directorate General Foreign Trad e (DGFT), on request by designated agencies.   
The authorities noted that the fill ratio of these quotas  is low, apparently because of a lack of demand 
due to high international prices of these commodities (Table III.6). " 
12. Could India provide information on the mechanism s in place to ensure  timely allotment of 
TRQ to the agencies by the DGFT, to ensure maximum benefit of the quota to the interested 
exporters? WT/TPR/M/249/Add.2 
Page 28  
 
  Reply: List of eligible entities for allocation of quota has been stated in paragraph 2.59.1 of the 
Handbook of Procedure, Volume I and is available in  the website: http://dgft.gov.in.  All eligible 
entities are eligible to avail quotas as per reque st of applicants received and they may make 
application to DGFT in the prescribed format .  Completed application forms along with 
prescribed documents must reach on or before 1 March of each financial year preceding the 
year of quota. Imports have to be completed befo re 31 March of financial year i.e. consignments 
must be cleared by customs authorities before this date . 
(3) Services 
(iv) Transport 
Rail transport 
WTO Secretariat's report, page 172, para. 176 
EU 149:  The Secretariat's report informs that "/…/  An Accelerated Rail Development Fund is being 
considered by the Government to fund the remaining 36%.   /…/." 
13. Could India provide further details on the curren t status of the Accelerated Rail Development 
Fund? 
Reply:  The Fund has not yet been set up. 
JAPAN 
Follow-up questions  
REPORT BY THE SECRETARIAT 
Japan FQ 1: 
Question 2 (Page 50, Paragraph 42) 
As India stated at the previous TPR meeting held  in May 2007, Education Cess imposed by India's 
Customs "is in the nature of a tariff and is consiste nt with the WTO obligations so long as the tariff 
plus the customs education cess does not exceed th e bound rates." (quote from the previous TPR 
record)  This warrants the Education Cess to be s ubject to the disciplines of Article II 1 of GATT 
1994.  Since the Education Cess is imposed on every im ported item, it is possible that the total amount 
of duty, including Education Cess, exceeds the boun d rate of duty appearing in the WTO Schedule of 
Concessions of India.  If such a case arises, the amount exceeding the bound rate of duty would be inconsistent with Article II 1.  What is India's view on this? 
Reply:  Such a situation is unlikely as, generally speaking, the WTO bound tariffs for India are 
much higher than the applied tariffs and the education cess is charged as a percentage of the applicable customs duty (and not ad valorem).  However, in keeping with its WTO obligations, 
India has ensured that wherever the applied tari ff plus education cess on an item exceeds the 
bound rate, a suitable exemption from the app lied tariff or education cess is provided.  For 
instance, wines have been exempted from education cess as the applied tariff on wines is at par 
with the bound rate of 150%.  In this manner, it has been ensured that the education cess is 
consistent with the discipline of Article II.1.  WT/TPR/M/249/Add.2 
 Page 29 
 
 
  Japan FQ 2: 
Question 6 (Page 69, Paragraph 105) 
According to the reply from India regarding Questi on 6, "there is no intention of not recognizing the 
process based conformance test conducted by int ernational labs for general IT products." Please 
explain what exactly the "general IT products" a re. Japan recognizes that the reply means that India 
will continue to accept the conformity assessment r esults by foreign CABs on  not only products but 
also on information security management systems of  "general IT products" after 1st April 2013. 
Japan would like to confirm that this understanding is correct. 
In addition, Japan recognizes that the reply means that foreign CABs will continue to be eligible to 
make certification on "general IT products" in Indi a after 1st April 2013. Japan would like to confirm 
that this understanding is correct. 
Reply:  The amendment issued on 31 May 2011 by Department of Telecommunications, India 
applies to only products which are put into te lecom network and deals with security testing of 
such products. For further clarity the ame ndment dated 31 May 2011 may be referred to.  
Japan FQ 3: Question 7 (Page 78, Paragraph 135-138) 
Concerning Table AIII.5 of the Appendix Tables,  India has been imposi ng export prohibitions on 
Non-basmati rice, wheat (including durum wheat) and meslin, etc. Could India please explain the 
reason for not notifying them to the Committee on Agri culture as India should do according to Article 
12.1(b) of the Agreement in Agriculture? 
Reply:  The various measures by India to, inter alia , address domestic concerns of inflation, 
ensuring domestic supply and food security , are taken in terms of relevant GATT/WTO 
provisions, which also specify the conditions under which a developing country Member would 
be required to notify such measures.  India is  required to notify these measures under Article 12 
of the Agreement on Agriculture only  if these conditions are satisfied. 
Japan FQ 4: Question 36 (Page 141, paragraph 61) 
Japan would like to know the names of the four banks with foreign capital over 49 percent and the 
proportion of foreign capital in each of them. 
Reply:  The four private banks that have foreign in vestment greater than 49% (as at the quarter 
ending 30 June 2011) are: 
Name of the bank Foreign investment (%) 
ING Vysya Bank Ltd. 61.30 
ICICI Bank Ltd. 53.33 
IndusInd Bank Ltd. 65.78 
YES Bank Ltd. 53.68 WT/TPR/M/249/Add.2 
Page 30  
 
  Japan FQ 5: 
Question 48 (Page 163-164, Paragraph 140) 
Regarding the answer to Q48 (2), please describe more on "qualifying ships" based on the following 
example answer. 
Q1 Flagging requirement 
[Example Answer] 
Tonnage Tax is applied not only on Indian-Flagged vessels, but also on foreign-flagged vessels Reply: A qualifying ship has been defined in Chapter XII-G of the Inco me Tax Act 1961, details 
of which can be seen from the following website www.incometaxindia.gov.in.  
Q2 What is the proportion of the number of vessel s owned by companies that have the Tonnage Tax 
Scheme-applied compared with the number vessel s time-chartered to number of vessels bareboat-
chartered? 
[Example Answer] Vessels owned by companies to which the Tonnage Tax Scheme-applied 1: Vessels that are time-
chartered/bareboat-chartered 3 
Reply:  Tonnage tax is applied not only to Indian flag vessels but also to foreign flag vessels 
chartered by tonnage tax company.  During the financial year 2010-11 the number of owned 
vessels operated by tonnage tax companies was 460 and the number of foreign flag vessels 
chartered (both voyage and time chartered basis)  by tonnage tax companies was 20 (Note: the 
number of vessels figure is worked out on the ba sis of total number of days vessel operated/365).  
REPORT BY INDIA 
Japan FQ 6: Question 55 (Page 19, Paragraph 57) 
Japan would like to know the specific schedule foreseen in order to make a Policy Decision on 
Foreign Direct Investment in Multi-Brand Retail Trading after receiving public comments. 
Reply: The feedback received from stakehol ders is presently under the consideration of 
Government. It is not feasible to specify  any specific time-frame in this regard. 
PERU Additional questions  Chapter III - Trade Policies and Practices Peru 18: 
What are the exceptions to the rule that all trans actions under the import regime are required to go 
through the financial system?  WT/TPR/M/249/Add.2 
 Page 31 
 
 
  Reply:  Manner of payments in respect of all tr ansactions under imports into India is governed 
in terms of paragraph 5 and 6 of the Notification No. FEMA 14 dated 3.05.2000. This is available in the website www.rbi.org.in. 
Peru 19: What does the Accredited Client's Programme in volve and what benefits does it afford importers? 
Reply:  Accredited Clients Program (ACP) was introduced along with the RMS.  The objective 
is to identify the importers of clean compliance tr ack record and facilitate their consignments 
upfront.  Their consignments are not subjected for any Customs control measures like assessment and examination.  
Peru 20: 
Customs officials are authorized to  seize at the border and destroy goods that infringe the industrial 
designs and copyrights of a right holder without a c ourt order.  Does this not affect an alleged 
infringer's right of defence?  What protection exist s against the actions of customs officials in such 
cases? 
Reply:  Under the Intellectual Property Righ ts (Imported Goods) Enforcement Rules 2007, 
Customs immediately informs the importer as well as the right holder or their respective 
authorized representatives about the suspension of clearance of the goods along with the reasons 
for such suspension.  
Further, the Commissioner or the officer duly auth orized in this behalf has to allow the 
importer or their duly authorized representatives to examine the goods, the clearance of which 
has been suspended, and provide representative sa mples for examination, testing and analysis to 
assist in determining whether the goods are pi rated, counterfeit or otherwise infringe an 
intellectual property right, without prejudice to the protection of confidential information.  
Further, at the request of the importer or his duly authorized representative, Customs shall 
inform the name and address of the right hold er and without prejudice to the protection of 
confidential information Customs may also provide additional relevant information relating to 
the consignment, which has been suspended fr om clearance. Thus, the importer is given 
opportunity to explain his position before a final decision is taken. There is also provision for 
filing appeal against the order of the customs officer. 
Peru 21: When a right holder does not live in the country, who is notified if an infringement is detected during 
the application of border measures under the transhipment and transit regimes? 
Reply:  Indian Customs IPR law does not apply to goods in transit. 
UNITED STATES  
Follow-up questions 
From the number of questions that we and other de legations asked India to answer, we can see that 
Members continue to seek more information about India's trade policy regime and practices. The 
United States places great value on the important role played by the TPR mechanism in helping 
Members better understand each other's policies, and invites India to continue to help the TPR 
mechanism fulfill that role by providing co mprehensive and meaningful responses to Members' WT/TPR/M/249/Add.2 
Page 32  
 
  follow-up questions.  We again urge India to a ccelerate its moves to increasing the transparency and 
predictability of its trade policy regime. 
Among the specific follow-up questions we would like to ask are the following:  US FQ 1: 
 The United States asked about the role of international trade in goods and services –BOTH 
exports and imports –in India's efforts to confr ont its poverty alleviation (U.S. Question 9).  
India chose to address the export side of the equation only.  We would like a response 
regarding the import side of the total trade equa tion.  What role do imports play, in India's 
view, in addressing its poverty alleviation challenges? 
Reply: In the last few years, the year on year  growth of India's imports has been invariably 
much higher than that of exports leading to an in creasing trade deficit.  Imports are essential to 
meet the requirements of a fast growing econo my.  Our import tariff rates on essential 
commodities have been kept at reasonable le vels to promote a fairly open economy.  
The important commodities in our import basket  are petroleum products, fertilizers, capital 
goods, chemical, gold and silver and pearls and p recious stones.  Some of the items have an 
important role in poverty alleviation as these are inputs for industries which provide gainful 
employment.  
US FQ 2: 
 In question 16, the United States asked, among oth er things, whether India envisions that its 
long-term objective "to accelerate the expor t growth rate to 25% per annum and double 
India's share in global trade by 2020" will be attainable in the global market as it exists 
today, or do global markets need to grow ever larger to accommodate India's export goals?  
In response, India directed us to its strate gy paper on the Department of Commerce website. 
We have read your Strategy paper on-line.  It, in part responds to our question.  But, the Indian 
government, itself raises the question of how, for example, India is to address its infrastructural 
bottlenecks ("the single most important constraint  for achieving accelerated growth of Indian 
exports").  The strategy paper on the website does not seem to address the question of whether India 
considers that the openness of its own market has an impor tant role to play in achieving its objectives.  
Does India consider that the openness of its own market has an important role to play in this regard?   
Reply:  India has been unilaterally opening its market over the years.    US FQ 3: 
 With regard to U.S. question 10, India responde d that "Revenue from non-tax sources could 
increase with better policies in the use of scarce resources/assets of the nation. The 
increasing use of auction mode in this regard would help garner resources." 
o What does India mean by "the increasing use of auction mode"?  Please describe how 
"auction mode" is currently used and its im pact on trade.  How does it help garner 
resources? 
Reply:  U.S. question 10 was in the context of the Secretariat's observation that "tax revenue 
continues to be insufficient to finance India's infrastructural and developmental needs" and it 
asked what tools the Indian government has to address each of these needs.  WT/TPR/M/249/Add.2 
 Page 33 
 
 
  India's response to the Question was a reference to various steps taken to unlock resources by 
reducing expenditure and generate revenue from non-tax sources. This includes the use of policies that will enable better utilization of scarce resources and assets by  allocating them at 
market-determined prices. Increasingly, this is being done through auctions, which are also 
expected to result in better realization of revenue. 
US FQ 4: 
 In U.S. Question 15, we asked India to descri be its trade policy making apparatus.  India 
responded only that it arrives at a government  consensus on trade policy and negotiating 
positions "through a process of continuous dialogue with all stakeholders… Intra 
governmental consultations are also held on cross-cutting issues before formulating the trade 
policy & the negotiating positions." 
o Our Follow-Up Question:  How does Indi a ensure that all interested parties, 
including foreign governments, investors and manufacturers, have the opportunity for input on all trade-related policies before th ey are implemented?  For example, are 
ministries required by law to issue public requests for comment or draft regulations, 
or does each ministry have discretion to take such actions?  In addition, what are the 
interagency institutions and/or mechanisms (such as the Committ ee of Secretaries) 
that facilitate the intra-governmental c onsultations referenced in India's response? 
Reply:  As stated in the reply, trade policy meas ures are taken after wide consultation with the 
stake holders.  These are decided by the Cent ral Government and are made available in the 
public domain.  Nature of consultation would depend amongst others on a number of factors such as the gravity of the matter, the internat ional commitments (if any), the implementation 
and the effective time, implication on the rules and regulations of the other departments etc. 
US FQ 5: 
 In U.S. Question 17, we asked about the World B ank's assessment that India, in 2010, ranked 
165 out of 183 economies for ease of starting a business.  We asked India: "To what factors" it attributes "this low ranking, notwithstanding India's efforts to improve its business climate?"  And, we asked what additional measures India is considering to improve its 
business environment in an effort to achieve its trade and investment goals?  India responded 
that the World Bank's report does not represen t the business environmen t across the country, 
and that the World Bank's sample was too small.   India responded simply that "Government is 
reviewing the FDI policy and regulations, on a continuing basis, with a view to their further liberalisation and increasing th eir investor-friendliness." 
o The United States would like a more specific response, including what additional 
measures India is considering in this context to achieve its objectives. 
Reply:   While the FDI policy continues to be simplif ied and rationalized another area that 
Government is working on is streamlining and si mplifying the business environment.  An entity 
named "Invest India" has been set up in the DIPP as a single window facilitator for overseas 
investor. Further, the Government has initiated th e implementation of an e-business project to 
provide online registration and payment services  to investors and business houses.  The reform 
of the Companies Act is also presently underway which will ease the procedure of setting up of business.  As a business structure, the concept of LLP was introduced in India in the beginning 
of the year 2009.  A lot of measures for the protection of the investors have also been introduced.  The Ministry of Corporate Affa irs maintains two websites – www.iepf.gov.in and 
www.watchoutinvestors.com – and free-of-cost access is provided for the benefit of investors. WT/TPR/M/249/Add.2 
Page 34  
 
  The website – iepf.gov.in – is an information providing platform to promote awareness among 
the investors and general public by placing topics of financial literacy on public domain.  The 
content of this website is available in Englis h, Hindi and 11 regional languages. Website – 
www.watchoutinvestors.com – is a registry of all such persons and entities who have been 
indicted for economic offences by any of the regul ators.  This website is meant to provide an 
alert to investors to enable them to ta ke appropriate investment decisions.  
US FQ 6: 
 With regard to U.S. Question 45 regardi ng import licenses for remanufactured goods, we 
understand from India's response that licenses for importation of "remanufactured goods" are not automatic.  What are the conditions (i.e., the "merits to safeguard public interest") that 
must be met to receive a license, and where in I ndian law are these conditions set out?  When 
will India notify these conditions in light of the Import Licensing Agreement?  
Reply:  There is no conceptual clarity on wh at is a "remanufactured good" as there are various 
terms in vogue such as recycled, repaired, refur bished, re-used etc without a clarity on the 
definition.  Remanufactured goods are a matter of  great concern for developing countries like 
India as it would rise environmental and safety i ssues.  India has thus suggested in WTO that a 
"work programme" precede any commitments on market access.  The Foreign Trade Policy, 
2009-14, containing the import licensing conditi ons, has already been notified to WTO. 
Mr Chairman, the United States has additional follow-up questions for India that we would like to 
submit rather than provide orally.  We look forw ard to receiving full responses to all of our questions 
from the Indian government within th e requisite month following this TPR. 
Additional follow-up questions 
US FQ 7: 
(on US 22) 
Report by the Secretariat (WT/TPR/S/249): II.  TRADE POLICY REGIME: FRAMEWORK AND 
OBJECTIVES :(4) Investment Regime:(ii) Foreign investment regime: Page 33, Paragraph 40: 
India's Jawaharlal Nehru National Solar Mission (JNNSM) appears to condition investment in 
certain solar projects on what the JNNSM guidelin es call "domestic content requirements," which 
require that certain solar equipment used by develop ers in such projects be manufactured in India, 
i.e., of domestic (Indian) origin.  How does India view these requirements in light of its obligation 
under Article 2 of the TRIMS Agreement and the Illustrative List thereto? 
Reply:  The "domestic content requirements" in India's Jawaharlal Nehru National Solar 
Mission (JNNSM) is not inconsistent with India's obligation under Article 2 of the TRIMS 
Agreement and the Illustrative List thereto.    
U.S. Follow-Up Question:   The "domestic content requirements" require that investors use certain 
domestically-manufactured solar equipment in order to  be eligible to develop solar projects under the 
JNNSM.  In this light, please explain how these domestic content requirements are not "mandatory" 
measures that must be complied with to obtain an advantage, and that require the purchase of 
domestic products, as set out in the Illustrative List of the TRIMS Agreement. 
Reply: The immediate aim of the JNNSM is to focus on setting up an enabling environment for 
solar technology penetration in the country both at a centralized and de-centralized level.  
GATT Article III:8(a) permits exemption from national treatment principle in respect of  WT/TPR/M/249/Add.2 
 Page 35 
 
 
  procurement by governmental agencies of products for specified purposes and therefore the 
programme is not inconsistent with the provisions of Article 2 of TRIMS.  In India's views the domestic content requirement is not with a view  to obtain an advantage and is therefore not 
covered by the illustrative list of TRIMS.   
US FQ 8: 
(on US 24) 
Report by the Secretariat (WT/TPR/S/249):III.  TRADE POLICIES AND PRACTICES BY MEASURE: 
(1) Introduction: Page 36, Paragraph 6:   
The United States understands that the Government of  India's Department of Information Technology 
draft procurement guidelines for preferential ma rket access imposes purchasing requirements not 
only on government agencies, but also on central government licensees.  If the guidelines are 
adopted, they would establish a 30 percent preference for the procurement of domestically produced 
electronics.  The April 2011 TRAI recommendations on domestic telecom equipment manufacturing 
impose similar obligations on licensees and characteri ze their purchases as govern ment procurement.  
Could India please clarify how these preference  regimes for domestic purchases carried out by 
private sector enterprises that are licensed by the government qualify as "products purchased for 
governmental purposes" so as to constitute go vernment procurement under the terms of GATT 
Article III:8(a)?   
Reply: The draft guidelines of Department of Information Technology are under the 
consideration of the Central Government and policy decision is yet to be taken.  Similarly the TRAI recommendations on telecom equipment manufacturing policy are under consideration 
by the Central Government and the policy has not yet been formulated.  It may be premature to 
comment on the compatibility with GATT Article III.8(a) of a recommendation.   
U.S. Follow-Up Question:   Please explain each of the steps that  is required before the DIT guidelines 
and a policy based on the TRAI recommendations wo uld become legally enforceable measures. 
Reply: In respect of Government's policy formulation there is generally a process of 
inter-ministerial consultations and thereafter all policy proposals are deliberated in the Union 
Cabinet.   
US FQ 9: 
(on US 29) 
Report by the Secretariat (WT/TPR/S/249):III.  TRADE POLICIES AND PRACTICES BY MEASURE: 
(2) Measures Directly Affecting Imports: (i) Customs procedures: Page 37, paragraph 13: 
The report indicates that under the risk manageme nt system (RMS) high risk cargo imported by ACP 
importers and non-ACP importers is subject to four  types of instructions: (a) imports may be 
discharged without further assessment (i.e. of their classification, rate of duty or valuation) or 
examination;  (b) imports may be cleared with no further assessment but subject to examination;  
(c) the release of imports requires further assessmen t but no examination;  or (d) imports must be 
assessed and examined.  What percentage of goods falls into category (a)? 
Reply:   At present 51% of the imports are discharged without assessment and examination.  
U.S. Follow-Up Question:   Could India explain the distinctions between (b) and (c).  What is the 
basis for an increase in assessment under (c) if there is no examination? What are the percentages of 
goods which fall into each of the remaining categories, respectively? WT/TPR/M/249/Add.2 
Page 36  
 
  Reply: (b) refers to cases where the consignmen ts are subjected to physical examination of 
goods only without scrutiny of declaration filed.  (c) refers to cases where  the consignments are 
subjected only to scrutiny of import declar ation without physical examination of goods.  
US FQ 10: 
(on US 30) 
Report by the Secretariat (WT/TPR/S/249):III.  TRADE POLICIES AND PRACTICES BY MEASURE: 
(2) Measures Directly Affecting Imports: (i) Customs procedures: Page 38, Paragraph 14: 
For imports of non-insecticidal boric acid, India re quires that import license applications specify the 
precise end-use and end-user of the boric acid.  The report further states that if these requirements 
are not fulfilled, imports are to be confiscated and th e importer may be fined a nd/or imprisoned.  We 
have noted our longstanding concerns about the nega tive impact that such a requirement has on the 
ability of intermediaries to import non-insecticidal boric  acid into India.  In what other circumstances 
can an importer be imprisoned in connection with an importation?  Are there process rights which 
are afforded to an importer facing imprisonment in  connection with an importation?  Please provide 
the complete citation to India' s legislation on such matters. 
Furthermore, please explain  why end-user information is necessary fo r this particular product?  Are 
domestic producers of boric acid required to spec ify the end-user prior to selling boric acid 
domestically?   
How does this requirement ensure that the good is not being misused once imported into India?  An 
instruction published by the Central Board of Excise and Customs on 22 June 2011 (F.No.401/101/2011-Cus.lll) appears to indicate t hat the clearance of products for household or non-
insecticidal purposes should not be subject to th e requirement of an import permit from CIB&RC.  
How then, does India justify the continued documen tary requirements for non-insecticidal boric acid, 
which appears contrary to the Government's own interpretation of the Insecticides Act and appears 
intended to restrict legitimate trade of the product?   
Reply:  Boric acid can be used for multiple purposes.  The restriction is for regulating it when 
used as insecticide. Information about end-use fo r import of boric acid is necessary to ensure 
that boric acid imported for non-insectic idal purposes does not get diverted to 
improper/un-regulated use.  There is a corresp onding requirement for domestic producers of 
boric acid requiring declaration of particula rs regarding quantum of boric acid manufactured 
and sold by them to ascertain/verify its end-use.   There is no special stipulation for boric acid 
only as the requirements relating to such permit  and reporting apply to all dual or multi use 
insecticides.  Section 29 of the insecticides act 1968 enumerates the offences for which 
punishment of imprisonment (or fine or both ) has been provided for.  There are several 
Government enforcement/intelligence agencies wh ich keep a vigil on misuse whether it is  
imported or diverted from local market.  The customs circular dated 22.6.2011 only clarifies the 
provisions of section 38 (exemption) of the insecticides act, 1968 and is not contrary.  
U.S. Follow-Up Question:    For imports of non-insecticidal bor ic acid, India requires that import 
license applications specify the preci se end-use and end-user of the boric acid.  The report states that 
if these requirements are not fulfilled, imports are to  be confiscated and the importer may be fined 
and/or imprisoned.  As asked in our initial qu estion, are there other ci rcumstances in which an 
importer could be imprisoned in connection with an importation?  Are there process rights which are 
afforded to an importer facing imprisonment in connection with an importation?  Please provide the 
complete citation to India's legislation on such matters.   WT/TPR/M/249/Add.2 
 Page 37 
 
 
  Reply:  Circumstances under which imprisonment can be made are contained in Section 29 of 
the Insecticides Act.  
As per Customs Act 1962, as amended, an import er could be imprisoned in connection with an 
importation when the person is involved in smu ggling and other modus operandi of imports and 
exports, in violation of prohibitions/ restricti ons in vogue or with intent to evade duties or 
fraudulently claim funds from the Government are liable to serious penal action under the 
Customs Act.  Any person guilty of serious o ffence under Customs Act, which is punishable 
under section 135 of the said Act, can be arrested by a customs officer authorised in this behalf. 
Other such provisions are stated in Section 132, 133 and 134 of the Customs Act 1962.  These 
provisions are available in the website cbec.gov.in. 
As regards process rights,  under the law, the person being arrested  is entitled to be informed 
about the grounds of such arrest.  The said s ection also provides that every person arrested 
under the Act has to be taken without unnecessary delay to the nearest Magistrate.  Since the 
Customs Act does not contain any provision reg ulating the manner in which a person arrested 
is to be dealt with by the Magistrate, therefore, the provisions of the Criminal Procedure Code 
(Cr.P.C) which regulate this aspect would be  applicable to the person arrested under the 
provisions of the Customs Act.  The power to remand to judicial custody vests with the 
Magistrate by virtue of section 165 of the Cr.P.C. 
US FQ 11: 
(on US 31) 
Report by the Secretariat (WT/TPR/S/249):III.  TRADE POLICIES AND PRACTICES BY MEASURE: 
(2) Measures Directly Affecting Imports: (i) Cu stoms procedures: Page 38, paragraph 15:   
The report indicates that imports under duty exempti ons and free-trade zone schemes are required to 
execute a bond equal to the amount of payable duty on the imported goods.  How is a determination 
made on the amount of payable duty? 
Reply: The amount of payable duty is the total duty payable on the imported goods as per the 
rates applicable, but for the exemption avai lable and claimed under the said schemes. 
U.S. Follow-Up Question:  Is the rate applicable the MFN rate or another rate?  Is the amount of 
payable duty based on the rate applicable for the good as imported from the free trade zone or as 
entered into the free trade zone?  If the applicable  rate is based on the total duty payable for the good 
at the time it is imported from the free-trade zone, how does India know what the final good will be 
for purposes of determining the total duty applicabl e? Are similar bonding requirements imposed on 
goods that are not imported under duty exem ptions or free-trade zone schemes? 
Reply: The rates applicable are the MFN rates. Th e amount of payable duty is calculated with 
reference to the rates applicable  on the imported goods as they enter into the free trade zone. 
Generally speaking, the goods are not subjected  to bonding requirements if they are not 
imported under the duty exemption or free trade zone schemes. 
US FQ 12: 
(on US 32) 
Report by the Secretariat (WT/TPR/S/249):III.  TRADE POLICIES AND PRACTICES BY MEASURE: 
(2) Measures Directly Affecting Imports: (i) Cu stoms procedures: Page 38, paragraph 16:   WT/TPR/M/249/Add.2 
Page 38  
 
  The report states that on average import procedures are completed in 20 days.  Does the filing of a 
bill of entry in advance of arrival of the goods re duce this time?  What is the average time for 
clearance of goods imported by ACP importers? 
Reply: The filing of a bill of entry in advance of arrival of the goods reduces the time. The 
average time for clearance of good s imported by ACP clients is 1 hour 6 minutes (8.08 minutes 
for assessment and 58.15 minutes for examination). 
U.S. Follow-Up Question:  Please clarify the difference between  assessment and examination.  Does 
examination refer to physical or documentary examination? 
Reply: Assessment refers to verification of impo rt declaration (e.g. declared classification and 
valuation of goods), whereas examination refers to physical verification goods. 
US FQ 13: 
(on US 34) 
Report by the Secretariat (WT/TPR/S/249):III.  TRADE POLICIES AND PRACTICES BY MEASURE: 
(2) Measures Directly Affecting Imports: (i) Customs procedures: Page 39, paragraph 18: 
The Secretariat report indicates that India has m andatory preshipment inspections requirements for 
imports of metallic waste and scrap. Has India notifie d such requirements to th e WTO?  If not, when 
will India submit its notification of these preshipme nt inspection requirements? Does India plan to 
phase out these requirements?  If so, when? 
Reply: Indian will be notifying the requirement  to WTO shortly; however, the procedure to 
import the metallic waste and scrap is given at para 2.32 of the Handbook of Procedures 
Volume 1 and a copy of the same is available at http://dgft.gov.in.  
U.S. Follow-Up Question:  Does India plan to phase out these requirements?  If so, when? 
Reply: There is no such plan at present on  account of safety and security concerns. 
US FQ 14: 
(on US 35) 
Report by the Secretariat (WT/TPR/S/249):III.  TRADE POLICIES AND PRACTICES BY MEASURE: 
(2) Measures Directly Affecting Imports:(ii) Customs valuation and clearance: Page 39, 
paragraph 20:   
The report states that transaction value may be  rejected if reasonable doubt arises concerning the 
accuracy of the declared value such as a significantly higher va lue at which identical or similar 
imports at (or about) the same time, in comparable quantities and comparable commercial transaction, were assessed.  What is considered a significantly higher value which gives rise to a 
reasonable suspicion?  The report also states that royalties and license fees must  be included in the 
transaction value if not included in the price actua lly paid or payable.  How is this requirement 
consistent with Article 8 of the CVA? 
Reply:  Under Rule 12 of the Customs Valuat ion Rules 2007 the Customs may raise doubts on 
the truth or accuracy of the declared value of the goods where identical or similar goods are 
imported at a significantly higher value at or about the same time in comparable quantities in a 
comparable commercial transaction.  The t erm "significantly higher value" has not been  WT/TPR/M/249/Add.2 
 Page 39 
 
 
  defined under the said Rules.  The ordinary meanin g of the term "significantly higher value" is 
"substantially higher value" or "considerably higher value".   
It is relevant to mention here that Rule 12 by itself does not provide a method for determination 
of value; it provides a mechanism and procedure for rejection of declared value in cases where there is reasonable doubt that the declared value  does not represent the transaction value.  The 
acceptance of the declared value is based on the facts and circumstances of each transaction, as 
envisaged in the CVA.   
The customs valuation legislation of India has b een framed on the lines of the CVA.  Following 
the CVA, the law provides that where the decl ared value is rejected, the value will be 
determined by proceeding sequentially in accord ance with rules 4 to 9 of the said Customs 
Valuation Rules 2007.  
Under Article 8 1(c) of the CVA, royalties and lic ense fees related to the goods being valued that 
the buyer must pay, either directly or indirectly, as a condition of sale of the goods being valued, to the extent that such royalties and fees are not included in the price actually paid or payable, 
are taken into account in determining the customs value under the provisions of Article 1.  This 
provision has been incorporated in the customs valuation legislation of India. 
U.S. Follow-Up Question:  In practice does India have a threshold amount or percentage deviation 
from the value of identical or similar goods for purposes of raising doubts on the truth or accuracy of 
the declared value of the good? 
Reply: India does not have a fixed threshold amo unt or percentage deviation from the value of 
identical or similar goods for the purposes of rais ing doubts on the truth or accuracy of the 
declared value of the imported goods.  Rule 12 of the Customs Valuation Rules 2007 is not a 
substantive provision but a procedural guidance to the assessing officers for application of the 
said rules.  The doubt as regards the inadequa cy of the declared value would depend on the 
facts and circumstances of each transaction, a nd the further course of action for determination 
of value would be carried out as per the Indian customs valuation rules, which are aligned to the 
WTO Customs Valuation Agreement. 
US FQ 15: 
(on US 36) 
Report by the Secretariat (WT/TPR/S/249):III.  TRADE POLICIES AND PRACTICES BY MEASURE: 
(2) Measures Directly Affecting Imports:(ii) Customs valuation and clearance: Page 39, 
paragraphs 20-25: 
Does India apply paragraph 2 of the Decision on the Valuation of Carrier Media Bearing Software 
for Data Processing Equipment?  If not, why not , and would India consid er applying paragraph 2? 
Reply:  India follows the valuation practice mentioned in Para 1 of the Decision No. 4.1 adopted 
during the Tenth Meeting of the Committee on Customs Valuation held on 24 September 1984. 
Para 2 of the Decision indicates that the approach to include only the cost or value of the carrier 
medium and not to include the cost or value of th e data or instructions for valuation purposes is 
optional. Further, Para 3 of the Decision re quires that only those Parties which adopt the 
practice of not including cost or value of the da ta or instructions while assessing carrier media 
will be required to notify the committee. 
In India's case, the approach on valuation is based on transaction value under Section 14 of the 
Customs Act 1962 read with the Customs Valuatio n Rules, 2007 which provide for inclusion of WT/TPR/M/249/Add.2 
Page 40  
 
  additional elements such as royalties a nd license fees in the assessable value under certain 
conditions. In view of Para 3 of the aforesaid Deci sion, India is not required to notify its position 
to the Valuation Committee.  Elaborate on conditions. 
As for the question whether India would consider applying paragraph 2, it is not possible to 
predict decisions that might be taken in future . 
U.S. Follow-Up Question : Under what conditions does India include the royalties and license fees?  
Do these circumstances include where  the buyer must pay either directly or indirectly as a condition 
of sale of the goods being valued?  If not, please ex plain this practice in light of Article 8 of the 
Customs Valuation Agreement. 
Reply: The conditions for inclusion of royalties a nd license fees are similar to those envisaged in 
the WTO CVA i.e. where the royalties and licence  fees related to the imported goods that the 
buyer is required to pay, directly or indirectly, as a condition of the sale of the goods being valued, to the extent that such royalties and fees are not included in the price actually paid or 
payable. 
US FQ 16: 
(on US 37) 
Report by the Secretariat (WT/TPR/S/249):III.  TRADE POLICIES AND PRACTICES BY MEASURE: 
(2) Measures Directly Affecting Imports:(ii) Customs valuation and clearance: Page 40, 
paragraph 21: 
The Secretariat report indicates that a landing charge of 1% of the c.i.f. value is added to the c.i.f. 
value to calculate transaction value.  Does India consider such a charge to be part of the price 
actually paid or payable for the goods when sold for export to Indi a?  If so, please explain this 
practice in light of the CVA, in particular, paragra ph 3(c) of the Note to Article 1, which indicates 
that the customs value shall not include duties and taxes of the country of importation provided that they are distinguished from the price actually paid or payable for the imported goods? 
Reply: Article 8.2 of the CVA states that, in fram ing its legislation, each Member shall provide 
for the inclusion in or the exclusion from the customs value, in whole or in part, the loading, 
unloading and handling charges associated with the transport of the imported goods to the port or place of importation.  India has provided for the inclusion in the assessable value of landing 
charges which represent the cost of unloading and handling charges of the imported goods at 
the port of importation. 
The landing charges do not represent the duties and taxes of the country of importation, viz. 
India.  
U.S. Follow-Up Question:  What type of fee does India consider  the landing charges to represent if 
they do not represent the duties and taxes of the country of  importation, viz. India?  Is the landing 
charge assessed whether or not the charge is al ready part of the price pai d or payable?  Is the 
landing charge assessed on all imports? 
Reply: Landing charges are akin to unloadin g and handling charges associated with the 
delivery of the imported goods at the place of im portation.  They are not a separate fee or duty 
or tax collected by Indian Customs.  
Under Article 1 of the CVA, the customs value of imported goods is the transaction value, that is 
the price actually paid or payable for the goo ds when sold for export to the country of  WT/TPR/M/249/Add.2 
 Page 41 
 
 
  importation adjusted in accordance with the provisions of Article 8, provided certain 
requirements are met.  Article 8.2 states that, in framing its legislation, each Member shall 
provide for the inclusion in or the exclusion fr om the customs value, in whole or in part, the 
loading, unloading and handling charges associated with the transport of the imported goods to the port or place of importation.  The landi ng charges are added to the customs value / 
transaction value, which is the price actually paid or payable for the imported goods.  
Landing charges are assessed on all imports. US FQ 17: 
(on US 38) 
Report by the Secretariat (WT/TPR/S/249):III.  TRADE POLICIES AND PRACTICES BY MEASURE: 
(2) Measures Directly Affecting Imports:(ii) Customs valuation and clearance: Page 40, 
paragraph 22:   
The report states that the Central Board of Excise Customs can fix "tariff values" (reference prices) 
for any type of imported good.  The Secretariat report notes that India uses reference prices to 
calculate customs duties for imports of palm oils, crude soybean oils, poppy seeds, and brass strap.  
The report also notes that reference prices for edib le oils have remained unchanged since 2006.  Why 
are these particular products subjected to referen ce prices?  How are these reference prices 
calculated?  Please provide further details on the background and data source used to establish 
reference prices.  Please explain the use of referen ce prices in light of Article 7 of the CVA. 
Reply: Tariff values have been notified for pa lm oils, crude soybean oil, poppy seeds and brass 
scrap, as these goods are prone to undervaluation.  Tariff values are fixed on the basis of 
prevailing international prices of these good s as observed from the various reputed 
international journals and other publications.  
The tariff values are neither arbitrary or fictit ious values nor minimum customs values.  These 
values are floating values and are frequently reviewed and revised.  As the tariff values on identified goods are computed based on the preva iling international prices, that is to say, the 
prices at which these goods are sold or offered fo r sale in the ordinary course of international 
trade under fully competitive conditions, such valu es are not inconsistent with Article VII of the 
GATT 1994 read with the CVA.  
The tariff value system promotes greater uniformit y and certainty in assessment practice.  It 
checks undervaluation and thus acts as an im portant policy instrument for collection of 
appropriate amount of customs duty.  
U.S. Follow-Up Question:  Please specify the international journals and publications from which the 
tariff values are derived.  How does In dia use this information to calculate the tariff value? Is India's 
policy to reject the transaction value where it is l ess than the tariff value?  Does India consider 
requesting further documentation befo re imposing the set tariff value? 
Reply: Tariff values are computed based on sources such as London Metal Exchange Price, 
Public Ledger etc.  As already mentioned, tariff value is not minimum value.  Hence, the value 
for computation of duty in case of commodities wh ere tariff value has been notified, is the said 
tariff value and not the declared value irrespective of the fact that the declared value is higher 
or lower than the tariff value. WT/TPR/M/249/Add.2 
Page 42  
 
  US FQ 18: 
(on US 40) 
Report by the Secretariat (WT/TPR/S/249):III. TRADE POLICIES AND PRACTICES BY MEASURE: 
(2) Measures Directly Affecting Imports: (ii)  Customs valuation and clearance: Page 41, 
paragraph 25: 
The report indicates transaction value is not used  to assess additional duty on imports of packaged 
goods. Please explain this in light of Article 1 of the CVA.  
Reply:  Central excise duty is chargeable on  domestically produced goods. While some goods 
are charged to excise duty based on transact ion value, certain packaged goods are subject to 
excise duty based on maximum retail sale price less abatement.  Hence, when like packaged 
goods are imported, they are a ssessed to additional duty on maximum retail sale price less 
abatement so to provide a level playi ng field to the domestic industry. 
U.S. Follow-Up Question: We understand from India's response t hat rather than using transaction 
value as contemplated by CVA Article 1, Indi a applies a value based on the Maximum Retail Sale 
Price, and that the reason for this departure from Artic le 1 is to "provide a level playing field to the 
domestic industry."  Please explain how, under WT O rules, this explanation excuses India from 
complying with the CVA Article 1 genera l requirement to use transaction value. 
Reply:  Under Article II:2(a) of the GATT 1994, Membe rs are allowed to impose a charge on the 
imported products equivalent to internal taxes applied on like domestic products.  
Unlike the basic customs duty, the additional cust oms duty is a charge equivalent to an internal 
tax (i.e. the Central Excise duty) applied to like do mestic products.  In most cases central excise 
duty is based on transaction value. However in  the case of few notified packaged commodities, 
central excise duty is charged on the basis of the maximum retail sale price less the abatement.  
Therefore, when such notified packaged goods a re imported, they are charged to additional 
customs duty on the same basis.  
US FQ 19: 
(on US 44) 
Report by the Secretariat (WT/TPR/S/249):III.  TRADE POLICIES AND PRACTICES BY MEASURE: 
(2) Measures Directly Affecting Imports: (vi) Import prohibitions, restri ctions, and licensing: 
Page 53, paragraph 53:   
The Secretariat report states that "For sanitary reasons, India has c ontinued to ban imports of certain 
avian livestock and livestock products."  Please explain how India's currently applied measures on 
avian influenza conform to the World Organization for Animal Health (OIE) guidelines on acceptable 
international measures for preven ting the spread of this disease in commercial poultry trade. 
Reply:  OIE recognizes that epidemiology of Avian Influenza (AI) differs widely in different 
regions of the world.  India's AI measures a re based on scientific observations and available 
experience in India and around the world.  
U.S. Follow-Up Question:  India's response fails to make refer ence to specific OIE guidelines on 
avian influenza, and does not explain India's existing ban in light of those specific guidelines.  Please 
explain how India's existing ban implements or differs from the specific OIE guidelines on avian 
influenza.  WT/TPR/M/249/Add.2 
 Page 43 
 
 
  Reply:  The FAO accepts that the Avian Influenza virus may jump species, geography and 
virulence, for reasons/factor yet not properl y understood. India has recently requested OIE to 
review its guidelines on Avian Influenza relat ed matter on the basis of recent scientific 
revelation. 
US FQ 20: 
(on US 49) 
Report by the Secretariat (WT/TPR/S/249):III.  TRADE POLICIES AND PRACTICES BY MEASURE: 
(2) Measures Directly Affecting Imports: (vi) Import prohibitions, restri ctions, and licensing: 
Page 57, paragraph 62:   
Please explain the ratio nale for imposing restrictions on imports t hat do not meet a "minimum price."  
How does India assess the "quality" of a product that is so restricted?  Does India impose a 
corresponding "minimum price" requirement  on the sale of domestic products? 
Reply:   Minimum import price is one of the criteria to determine quality.  Several factors are 
kept in mind while determining the minimum price. 
U.S. Follow-Up Question:    India's response attempts to a ddress how India determines the minimum 
price.  Please explain, however, why imports are re quired to meet a "minimum price" at all, and 
whether domestic products sold in India must  also meet the same "minimum price." 
Reply: The essence of minimum price is the concern  on quality products to be imported. Such 
specific products are minimal.   
US FQ 21: 
(on US 51) 
Report by the Secretariat (WT/TPR/S/249):III.  TRADE POLICIES AND PRACTICES BY MEASURE: 
(2) Measures Directly Affecting Imports: (vi) Import prohibitions, restri ctions, and licensing: 
Page 58, Section III(2)(vi)(d):   
The United States understands that India offers subsid ized rates (i.e., above market) when purchasing 
solar power generated by projects under the Jawahar lal Nehru National Solar Mission (JNNSM).  A 
developer may only get these subsidized rates, however, if it complies with what the JNNSM 
guidelines call "domestic content re quirements," which require that certain solar equipment used by 
developers in such projects be manufactured in Indi a, i.e., of domestic (Indian) origin.  How does 
India view these requirements in light of its oblig ation under Article 3.1(b) of the SCM Agreement? 
Reply:  In India's views, the power purchase arra ngements under the India's Jawaharlal Nehru 
National Solar Mission (JNNSM) do not involve subsidies which are prohibited under Article 3.1 (b) 
of ASCM.   
U.S. Follow-Up Question:   Please explain how th e prices are determined for purchasing solar 
power generated by projects under the JNNSM.  Are the prices paid for such power the same as 
prices paid for power (whether of solar origin or otherwise) purchased from entities other than 
developers under the JNNSM? 
Reply:  Under the first phase of JNNSM, which is under implementation, grid connected solar 
power projects are to be set up on build, own an d operate basis.  NTPC Vidyut Vyapar Nigam 
(NVVN) will purchase solar power from the selec ted project developers at a rate determined 
through bidding process.  The project developers a re expected to decide the tariff to be offered WT/TPR/M/249/Add.2 
Page 44  
 
  by them in the bidding process.  Under the JNNS M, no other mechanism exists for purchase of 
grid connected solar power from any entity who wishes to set up a new grid solar power plant. 
In the bidding process a project developer is free  to decide whether to use crystalline silicon 
modules or modules made from any other technology option globally available.  The selection of project through bidding process is independent of choice of technology. 
US FQ 22: 
(on US 55) 
Report by the Secretariat (WT/TPR/S/249):III.  TRADE POLICIES AND PRACTICES BY MEASURE: 
(2) Measures Directly Affecting Imports: (viii)  C ontingency measures: Page  65 paragraph 92:   
The Secretariat report indicates that safeguard decisions are made by the Standing Board on 
Safeguards ("the Board").  However, very little is  known about this body.  Could India please provide 
further information about this Board including tim etables for decision making, structural composition 
of the Board and the policies under which the Board operates? 
Reply: "Standing Board on safeguards was co nstituted by the Government of India with 
Secretary, Department of Commerce as Chairman. Other Members of the Board are 
Secretaries from Department of Revenue, Department of Agriculture and Cooperation, 
Department of Industrial Policy and Promotion and Secretary (ER) in Ministry of External 
Affairs.  Secretaries of any other ministry/d epartment concerned with the safeguard measure 
may also be co-opted to attend the meeting of the Standing Board on Safeguards (Board).   
The Board considers the recommendations made  by the Director General Safeguards (the 
investigating authority) and conveys its reco mmendation to the Central Government after 
deliberation in the meeting of the Board.  The Board will also consider recommendations 
relating to safeguard measures in the form of quantitative restrictions and convey its 
recommendation to the Central Government." 
U.S. Follow-Up Question:    Please identify the relevant laws, regulations or other official documents 
that describe the composition, authority, and op eration of the Standing Board on Safeguards. 
Reply: The administrative decision regarding the constitution of the Standing Board on 
Safeguards was taken by the Comm ittee of Secretaries of Government of India on 3.2.1998.  The 
composition of the board has been explained in  the previous reply.  The Board considers the 
recommendations of the DG (Safeguards) and sends  its views to the Central Government i.e. 
Ministry of Finance in respect of cases related to imposition of tariff.  
US FQ 23: 
(on US 62) 
Report by the Secretariat (WT/TPR/S/249):III.  TRADE POLICIES AND PRACTICES BY MEASURE: 
(2) Measures Directly Affecting Imports: (ix) T echnical regulations and standards: Pages 68-69, 
paragraphs 103-105:  
The United States understands that individual states in India are asking medical devices companies to 
provide pricing information and plant master file s.  These devices are distinct from drugs and 
typically have U.S. Food and Drug Administration appr oval when exported from the United States.  
Do states' regulators under the Drugs and Cosm etics Act have the authority to require this 
information, or does this authority belong to the central government?  Please explain the rationale for 
requesting pricing and other propr ietary information on medical devices, and can this objective be 
achieved in less burdensome and intrusive ways?  WT/TPR/M/249/Add.2 
 Page 45 
 
 
  Reply:  The information of Plant Master File is required to be submitted to the Central 
Government at the time of Registration.  There is no requirement for submission of Plant Master File to the State Regulatory Authorities for imported medical devices.  State authorities 
may however ask for information in certain cases where they have reasons to ask for such 
information as a regulatory authority. 
It is necessary to provide pricing and other proprietary information on medical devices to 
protect the interest of consumers.  
U.S. Follow-Up Question:   Please explain in more detail the sp ecific interests of consumers that are 
the objective of these requests for information, and how pricing and other proprietary information 
that may be requested helps adv ance each of those interests. 
Reply:  Under the Essential Commodities Act, admini stered by the Ministry of Consumer 
Affairs, the MRP is required to be mentioned on  the labels of medical devices also.  The State 
Regulatory Authorities (SRA) may therefore re quest the firm manufacturing the medical 
devices to provide this information.  Howev er, in certain cases, the SRA may call for any 
specific information to ensure the quality of th e medical device marketed in its State for 
protecting interest of the consumers.  
US FQ 24: 
(on US 66) 
Report by the Secretariat (WT/TPR/S/249): III. TRADE POLICIES AND PRACTICES BY MEASURE: 
(3) Measures Directly Affecting Exports:  (v ) Export prohibitions, restrictions, and licensing: 
Page 39, para 18, Page 77, paragraphs 131 and 132, (Tables III.15 and Table III.16):   
India has taken a number of measures, including at the state level, to restrain exports of steelmaking 
raw materials, despite the fact that India's gr owing steel industry itself relies on global trade for 
access to steelmaking raw materials.  Do stat es have the authority under Indian law to ban the export 
of any product?  Please explain the rationale for maintaining export licensing, bans and other 
restrictions on iron ore and ferrous  scrap, in light of Article XI of  the GATT.  Also, please explain 
why export taxes and additional measu res are necessary to restrict trade  in these raw materials.   
How does the imposition of export taxes (but very lo w domestic taxes) contribute to the responsible 
development of India's iron ore resource?  Does Indi a have any plans to reduce or eliminate its trade-
distorting export taxes on iron ore? 
Reply:  These taxes are reviewed from time to time. The nature of export restriction depends on 
the conditions and situations at a given time and is not inconsistent with the WTO provisions.  
Export regulations are governed  by the Central Government.   
U.S. Follow-Up Question:    What are the "conditions and sit uations" surrounding any existing export 
ban or restriction that substantiate India's assert ion that they are not inconsistent with WTO 
provisions?  Please explain how, given that ex port regulations are governed by the Central 
Government, individual states (e.g., Karnataka) ha ve been able to impose export bans on iron ore and 
other products. 
Reply:  No such ban on exports by the State Government is in operation. 
US FQ 25: 
(on US 67) WT/TPR/M/249/Add.2 
Page 46  
 
  Report by the Secretariat (WT/TPR/S/249): III. TRADE POLICIES AND PRACTICES BY MEASURE: 
(3) Measures Directly Affecting Exports:  (v ) Export prohibitions, restrictions, and licensing: 
Page 79, paragraph 140:   
The Secretariat's report states that "export licensing is sometimes used as a policy tool to ensure the 
domestic supply of certain products."  For example, at different periods in 2010, certain exports of 
cotton (HS 5201, 5202, and 5203), excluding cotton yarn, (HS 5205, 5206, and 5207), were restricted 
by an export license or by an export authorization re gistration certificate that was issued only after 
the domestic supply of cotton was ensured for the domestic garment and handloom sectors.  We 
understand that the restrictions on the export of cotto n have been lifted.  Please explain the rationale 
for these export restrictions, particularly in light of  India's commitments unde r Article XI and Article 
XX of the GATT.  Also, please indicate whether these  restrictions had the intended effect, and whether 
or not the Government plans to reinstate the restri ctions at the start of the new cotton season in 
October? 
Reply:  The restriction on export of cotton was im posed temporarily as allowed under Article 
XI of GATT.  Government policy on cotton exports is guided by the consideration of permitting 
export of surplus cotton from India. Accordingly, exportable surplus is determined from time to 
time and allowed to be exported either by pl acing cotton exports under free list or by way of 
quotas.  Export of cotton has b een made free for the cotton year 2010-11 (up to 30.09.2011) vide 
DGFT Notification No. 62 dated 02.08.2011, whic h is available in the website dgft.gov.in. It is 
only subject to registration of contracts for ex port of cotton with the Directorate General of 
Foreign Trade.   
U.S. Follow-Up Question:    Please explain the specific provisio n of Article XI that, in India's view, 
justified the previous cotton export restrictions.  Ca n India confirm that no export restrictions are 
applied to cotton for the 2011-2012 season? 
Reply:  Such short term measures are covered under pa ragraph 2 of Article XI of GATT, 1994. 
Export of cotton was made free for the cotto n year 2010-11 vide DGFT Notification No. 62 
dated 02.08.2011 and now export of cotton for th e cotton season 2011-12 also has been made 
free vide DGFT Notification No. 74 dated 12.09.2 011.  It is only subject to registration of 
contracts for export of cotton with the Di rectorate General of Foreign Trade. These 
notifications are available in the website dgft.gov.in. 
US FQ 26: 
(on US 68) 
Report by the Secretariat (WT/TPR/S/249): III. TRADE POLICIES AND PRACTICES BY 
MEASURE: (3) Measures Directly Affecting Exports:  (vii) Export support: P age 81, paragraph 145: 
The Secretariat's report states that India's latest notification to the WTO Committee on Subsidies and 
Countervailing Measures included tax incentives pr ovided under the Income Tax Act 1961 and to 
Export Oriented Units (EOUs). The United States would note that after nearly ten years since its last 
subsidies notification, India recently notified that  it maintained only these three subsidy programs 
despite evidence to the contrary, as detailed through out the Secretariat's report.  Could India please 
explain why each of the programs, which are de tailed throughout the Secretariat's report, is not 
subject to the notification obligations under Article  25 of the SCM Agreement?  If a program is 
subject to notification, please do so in accor dance with Article 25 of the SCM Agreement.   
Reply:  Several of the schemes detailed in the Secretariat Report are in the nature of duty 
exemption/duty remissions and are not in the natu re of subsidies within the meaning of ASCM.  
In those schemes, there is a clear co-relation between the items permitted for import duty free  WT/TPR/M/249/Add.2 
 Page 47 
 
 
  and their quantity with the corresponding export product.  There is no element of subsidy in 
such schemes as there is an appropriate veri fication mechanism to check whether any excess 
quantity of duty exempt material has been allowed for import.   
U.S. Follow-Up Question:  The United States would like to draw India's attention to the following 
programs that are detailed in the Secretariat's report and are not related in any manner to a 
legitimate duty drawback mechanism: 
 Focus Market Scheme; 
 Focus Product Scheme; 
 Status Holder Incentive Scheme; 
 Export Promotion Capital Goods Scheme (EPCGS); 
 Export and Trading Houses Scheme; and  
 Target Plus Scheme (TPS)  
The United States would ask India to please explain why each of these programs, which are detailed 
throughout the Secretariat's report,  is not subject to the notification obligations under Article 25 of 
the SCM Agreement?   
Reply:  India will take steps to notify programmes as appropriate.  
US FQ 27: 
(on US 71) 
Report by the Secretariat (WT/TPR/S/249): III. TRADE POLICIES AND PRACTICES BY MEASURE: 
(3) Measures Directly Affecting Exports:  (vii) Export support: Page 84, paragraph 155; Page 88, 
paragraphs 165-167; Page  89 paragraph 173:   
In addition to the SEZ and EOU programs, the Secretariat's report describes numerous other 
programs that appear to be export subsidies.  These programs include: 
 Advance Authorization Scheme; 
 Duty Free Import Authorization Scheme (DFIA); 
 Duty Entitlement Passbook Scheme (DEPBs); 
 Focus Market Scheme; 
 Focus Product Scheme; 
 Status Holder Incentive Scheme; 
 Export Promotion Capital Goods Scheme (EPCGS); 
 Export and Trading Houses Scheme;  
 Target Plus Scheme (TPS); and WT/TPR/M/249/Add.2 
Page 48  
 
   ExIm Bank lending. 
As noted as well in the Secretariat's report, pr oduct coverage and the level of benefits changed during 
the period under review and new export contingent sch emes were implemented.  Moreover, based on 
publicly available information and recent press re ports, many of these programs seem clearly to 
benefit the textile and apparel sector.  In light of th e WTO Secretariat's calculations that demonstrate 
India's exports of textile and apparel products are above the export competitiveness threshold as 
defined by Article 27.6 of the Agreemen t on Subsidies and Countervailing Measures 
(G/SCM/132/Add.1/Rev.1), does India recognize its obligation under Article 27.5 of the SCM Agreement to phase out all export subsidy benefits  provided to its textile and apparel sector?
3  If so, 
could India please explain what concrete steps I ndia is currently taking to phase-out these programs 
and describe the schedule under which these benefits to  the textile and apparel sector will be phased 
out?   
Reply:   As stated in response to question No. 68, sev eral schemes contained in the Secretariat's 
report are not in the nature of subsidies und er the ASCM Agreement and therefore do not 
require to be notified to the WTO.  This is sue was discussed in p revious Subsidies Committee 
meetings including the one held in May 2011.  India is committed to meeting its obligations 
under the Agreement but there are issues which n eed clarity and common understanding before 
further action can be taken. These issues have been raised in the Subsidies Committee. Clarity 
on the definition of 'product' for the purpose of Article 27.6 is the starting point for phasing out 
any subsidies.  Another issue is the calculation of the time when the obligation to phase out would begin.  
U.S. Follow-Up Question:  Is it India's belief  that Article  27.5 of the Agreement on Subsidies and 
Countervailing Measures allows India to continue  to extend existing export subsidy schemes and 
implement new ones in 2010-2011, despite the WTO Secretariat's calculation which demonstrates that 
India's exports of textile and apparel products are above the export competitiveness threshold, as 
defined by Article 27.6 of the Agreement on Subs idies and Countervailing Measures, as of no later 
than 2007 (G/SCM/132/Add.1/Rev.1)?  In addition, India's response suggests that, until there is 
"clarity and common understanding" on the obligations in Article 27, India does need to take steps to 
fulfill those obligations.  Is this correct?  How w ould such "clarity and common understanding" be 
reached?  Does India hold a similar view that other WTO obligations do not need to be implemented by a Member until "clarity and common understanding" have been achieved? 
Reply: India has been actively engaged in the discussions in the Subsidies Committee on this 
issue.  Clarity on the definition of product for the purpose of Article 27.6 is necessary as the 
obligation of a Member as per Article 27.5 is contingent on the correct interpretation of the term "product".  It may be incorrect to state that export subsidy schemes have been further expanded.  The DEPB scheme which was available to textiles and apparels is being discontinued 
with effect from 30 September 2011.    
                                                      
3 Under the Agreement on Subsidies and Counterv ailing Measures (SCM Agreement), developing 
countries receive special and differentia l treatment with respect to certain subsidy discip lines under Article 27.  
For developing countries listed in Annex VII of the SCM Agreement (including India) the SCM prohibition on 
export subsidies does not apply until (1) per capita GNP reach es a designated threshold or (2) eight years after 
the country achieves "export competitiveness" for a par ticular product.  Article 27.6 of the SCM Agreement 
defines export competitiveness as the point when an exported product reaches a share of 3.25 percent of world 
trade for two consecutive calendar years.  Export competitiveness is determined to exist either via notification by the developing country or on the basis of a computation undertaken by the WTO Subsidies Committee 
Secretariat at the request of any Member.  WT/TPR/M/249/Add.2 
 Page 49 
 
 
  US FQ 28: 
(on US 72) 
Report by the Secretariat (WT/TPR/S/249): III. TRADE POLICIES AND PRACTICES BY MEASURE: 
(3) Measures Directly Affecting Exports:  (vii) Export support: Page 84,  paragraph 155:   
The Secretariat's report states that firms, including those within the textiles and garment industries, 
that are established within a Special Economic Zone  (SEZ) "benefit from several incentives subject to 
generating foreign exchange earnings within five ye ars of operation." Specific ally, the Secretariat's 
report notes that SEZ units, including those within the textiles and garment industries, are exempt from various taxes, such as income tax, central sales tax, and minimum alternate tax, as well as from 
a series of state taxes (i.e. sales taxes, stamp dut y, and electricity duty).  The Secretariat's report 
states that both SEZs and EOUs are exempt from va rious taxes, including income tax, until March 31, 
2011.  Could India confirm whether all of these in centives ended on March 31, 2011, or whether some 
or all of them have continued past that date?  If  they have continued, please provide the expected date 
of termination, if any. 
Reply:  Provisions relating to EOUs are provided in Chapter VI of the Foreign Trade Policy 
2009-14, which may be viewed on http://dgft.gov.in. Income tax exemption for EOUs has been 
withdrawn with effect from 1.04.2011.  
Facilities available for SEZ units and SEZ de velopers are provided in the SEZ Act 2005 and 
SEZ Rules 2006, which may be viewed on www.sezindia.gov.in.  Minimum alternate tax (MAT) @18.5% has been imposed on SEZ units and de velopers with effect from 1 April 2012.  
Similarly SEZ developers are now required to pay dividend distribution tax (DDT), on which 
exemption was available previously.  
U.S. Follow-Up Question:  Apart from the income tax, MAT, and DDT, are there any remaining taxes 
from which SEZs and EOUs are exem pt as of September 16, 2011?  If exemption from other taxes for 
SEZs and EOUs has been terminated, please identify  the legal instruments that effectuate that 
termination. 
Reply:  The benefits extended to EOUs includes exemption of custom and central excise duty on 
capital goods and raw material and consumab les required for manufacturing of goods and 
services for export purpose and permissible sale  in DTA as per Foreign Trade Policy.  In 
addition, EOUs are eligible for full reimbursement of central sales tax (CST) charged on inter-state sales.  However, Income Tax benefi ts to these units for their export profits were 
available up to 31.3.2011.  No further extension has been granted. 
The tax benefits for SEZ units are as below: 
 Duty free import/domestic procurement of goods for development, operation and 
maintenance of SEZ units. 
 Exemption from central sales tax.  
 Exemption from service tax. 
 Exemption from state sales tax and other levies as extended by the respective State 
Governments.    WT/TPR/M/249/Add.2 
Page 50  
 
  US FQ 29: 
(on US 84) 
Report by the Secretariat (WT/TPR/S/249): III. TRADE POLICIES AND PRACTICES BY MEASURE: 
(3) Measures Directly Affecting Exports: (4) Measures Affecti ng Production and Trade: 
(vi) Intellectual property rights: Page 114, paragraph 250 
The Secretariat discusses the proof of  efficacy requirement in Section 3(d) of India's Patent Act.  
Under Section 3(d), if an applicant demonstrates the novelty, non-obviousness, and industrial use of a 
product, can it still be denied a pat ent on the grounds that it fails to also demonstrate a significant 
improvement in efficacy?  Does the Government of India consider this  requirement to be in line with 
TRIPS Article 27(1) which states that patents shall be available for inventions in all fields of 
technology provided they are new, involve an inventive step, and are capable of industrial 
application?  Please explain.   
Reply: 
 Patents are available to any invention that meets the criteria of patentability, that is, 
novelty, inventiveness and industrial application.  
 Section 3(d) prevents the grant of patent for merely new forms or new usages of known 
substances and thus averts grant of frivolou s patents, which may be obtained by minor 
modifications, particularly in the pharmaceutical sector. 
 The provisions for requirement of enhancemen t of the known efficacy under section 3(d) 
of the Patents Act, 1970 are only for the me re discovery of a new form of a known 
substance.  This provision has been made on ly to prevent the ever greening of product 
patents.   
 Section 3(d) is also intended to ensure availability of medicines by preventing 
ever-greening of existing patents and thus is  in consonance with Member States' rights 
of ensuring availability of medicines at reasonable prices for meeting public health 
requirements. 
 This is one of the recognized flexibilities available under Article 8 of the TRIPS 
Agreement that countries are free to adopt in their legislation as per Doha Declaration. 
 The Declaration states that TRIPS Agreement can and should be interpreted and 
implemented in a manner supportive of WTO Members' right to protect public health 
and, in particular, to promote access to medicines for all. 
 As such the said provisions of section 3(d) of the Patents Act, 1970 are fully compliant 
with Article 27(1) of the TRIPS Agreement read with Article 8 of the said Agreement. 
U.S. Follow-Up Question:    We understand from India's response that an invention that meets the 
three criteria of patentability could not separately be denied a patent on the grounds specified in 
Section 3(d).  Is this correct?  If not, please ex plain the interaction between the patentability criteria 
and Section 3(d).  
Reply: Patents are available to an invention th at meets the three criteria of patentability.  
However, the provisions for requirement of enhancement of the known efficacy under 
section 3(d) of the Patents Act, 1970 are only fo r the mere discovery of a new form of a known 
substance, as like salts, esters, ethers, polymo rphs, isomers, etc. which may be obtained by  WT/TPR/M/249/Add.2 
 Page 51 
 
 
  minor modifications, particularly in the pharmac eutical sector.  This provision has been made 
only to prevent the ever greening of product patents.  
US FQ 30: 
(on US 85) 
Report by the Secretariat (WT/TPR/S/249): III.  TRADE POLICIES AND PRACTICES BY 
MEASURE: (3) Measures Directly Affecting Expor ts: (4) Measures Affec ting Production and Trade: 
(vi) Intellectual property rights: Page 115, paragraph 256:   
The Secretariat indicates that DIPP has issued  a discussion paper on patent compulsory licensing 
with a view to developing a predictable environmen t to use such measures.  How will the Government 
of India ensure that any suggested changes to current implementation of compulsory licensing 
complies with all of the conditions in TRIPS Artic le 31?  Does India plan to seek public comments 
regarding any changes it is considering?  How does th e Government of India satisfy the undisclosed 
information obligations of TRIPS Article 39( 3), including protection of data against unfair 
commercial use? 
Reply: The Department of Industrial Policy and Promotion (DIPP) prepared a Discussion 
Paper on the subject of Compulsory Licensing and hosted the same on its website to invite the 
views and suggestion on certain issues for resoluti on. The objective of this exercise was not to 
invite any change/amendment to the provisions of  the Patent Act 1970 but only to elicit the 
suggestions to take an appropriate policy decision  whether the existing provisions of the Patents 
Act 1970 require any amplification through issuing of guidelines by the Government.  As such, 
the question of any change to the existing provisions of the Patents Act 1970 does not arise. 
Moreover, after obtaining and examining the su ggestions on the said Discussion Paper, the 
Government has decided that there is no need to issue additional guidelines for the issue of 
Compulsory License and issued a press release to th is effect to conclude the matter.  Further, 
the existing provisions of the Patent Act 1970 a re already TRIPS compliant including Article 31 
thereof. 
As regards the protection of undisclosed in formation against unfair commercial use as per 
Article 39(3) of TRIPS Agreement, adequate safegu ard provisions are there in the existing Acts. 
U.S. Follow-Up Question:    Please identify the "adequate sa feguard provisions ... in the existing 
Acts" that ensure compliance with TRIPS Article 39(3). 
Reply:  The protection to undisclosed informatio n against unfair competition is provided 
through the provisions of Common law, Law of To rts and the Indian Contract Act 1872.  Also 
Section 5 of the Official Secrets Act provides that unauthorized disclosure of official secrets is a 
punishable offence.  This provision is also a pplicable to government employees who are dealing 
with patent applications.  
US FQ 31: 
(on US 88) 
Report by the Secretariat (WT/TPR/S/249): III.  TRADE POLICIES AND PRACTICES BY 
MEASURE: (3) Measures Directly Affecting Expor ts: (4) Measures Affec ting Production and Trade: 
(vi) Intellectual property rights: Page 119, paragraph 278:   
The Secretariat's Report states:  "[T]he Copyright (Amendment) bill 2010 pr oposing amendments to 
the Copyright Act 1957 is being discussed in Par liament."  On August 12, 2011, press reports 
indicated that the Cabinet had approved changes to th e proposed bill.   What are the key issues in WT/TPR/M/249/Add.2 
Page 52  
 
  the cabinet-approved version of th e bill, and the expected timeline for legislative consideration and 
passage?  On a related legislative note, what is the status of India's draft optical disc law and India's efforts to combat optical disc piracy? 
Reply:  The Copyright (Amendment) Bill, 2010 pending  in Rajya Sabha (the Upper House of 
Parliament) since it was introduced on 19 April 2010. The Bill is available at 
www.copyright.gov.in.  The details of amendments  to the Bill will only be made available after 
both the Houses of Parliament consider the same. 
U.S. Follow-Up Question:    India's response failed to address optical disc piracy.  Please also 
explain the status of India's draft optical disc law and India's efforts to combat optical disc piracy. 
Reply: There is no draft optical disc law.  The existing enforcement provisions in the Copyright 
Act are being followed to combat optical disc piracy.  
US FQ 32: 
(on US 89) 
Report by the Secretariat (WT/TPR/S/249): III. TRADE POLICIES AND PRACTICES BY MEASURE: 
(3) Measures Directly Affecting Exports: (4) Measures Affecti ng Production and Trade: 
(vi) Intellectual property rights: Page 119, paragraph 280: 
The Secretariat's Report states: "Through the Inter national Copyright Order, copyright is protected 
in India for nationals of countries that are member s of the Berne Convention,  the Universal Copyright 
Convention, and the TRIPS Agreement."  Recently two Indian courts issued decisions effectively 
holding that songwriters and music publishers lose their exclusive public performance rights after 
their songs have been licensed for recording.  As a result of these rulings, radio stations will only be 
required to pay license fees to th e sound recording companies, but not to the collecting society which 
distributes royalties to the songwriters and publishers.  See Music Broadcast Private Ltd. v. Indian Performing Right Society (decided July 25, 2011 in Bombay; Suit No. 2401 of 2006) and Indian 
Performing Rights Society v Aditya Pandey (decided July 28, 2011in Mumbai; CS(OS) 1185/2006 & I.A. Nos. 6486/2006, 6487/2006 & 7027/2006).  Pl ease explain these decisions  in light of India's 
obligations under the Berne Conven tion (incorporated into the TRIPS Agreement by virtue of TRIPS 
Article 9(1)). 
Reply : Issues raised in these cases are sought to  be addressed in the Copyright (Amendment) 
Bill 2010 and the amendments to the Bill presentl y under Parliament scrutiny.  The Copyright 
Act 1957 is in compliance with India's obligatio ns under the Berne Convention (incorporated 
into the TRIPS Agreement by vi rtue of TRIPS Article 9(1)).  
U.S. Follow-Up Question:    Please explain how the amendmen ts to the Copyright Bill address the 
issues raised in the referenced  cases.  How will the provisions operate in practice? 
Reply: It is not possible to elaborate on the operative provisions of the amendments to the 
Copyright Bill since the bill it yet to be passed by the Parliament.  The proposed amendments 
can be accessed at http://www.copyright.gov.in.  
US FQ 33: 
(on US 95) 
Report by the Secretariat (WT/TPR/S/249): IV. TRADE POLICIES BY SELECTED SECTOR: (2) 
Agriculture: (ii) Agricultural policy objectives: Page 129, paragraph 18:  WT/TPR/M/249/Add.2 
 Page 53 
 
 
  The Secretariat report provides a brief description of  India's tariff rate quota (TRQ) system and its 
implementation.  The paragraph also states that  "Imports under TRQs are allowed only through 
eligible entities or designated agencies."  How does India determine and designate these eligible 
entities or agencies (identified on page 48, paragraph 37)? 
Reply : Para 2.59 of the Handbook of Procedures Volume 1 gives the details of the agencies and 
the same is available at http ://dgft.gov.in. Handling the TRQ requires a higher skill and thus the 
agencies notified are usually S TEs from the respective sectors.  
U.S. Follow-Up Question :   Please provide detailed and specific examples of what entails the "higher 
skill" used to determine and d esignate the qualified agencies?   
Does this list of agencies change over time?  Where would one find the most recent list?  (Note: We 
have consulted the referenced website  and cannot easily find the list.) 
Reply: Para 2.59 of the Handbook of Procedures Volume 1 contains the list of such agencies. 
These agencies are specialized agencies for hand ling bulk products, which ensures the basic 
principles of TRQ. Their performance could be  monitored with ease and with satisfaction.  
US FQ 34: 
(on US 98) 
Report by the Secretariat (WT/TPR/S/249): IV. TRADE POLICIES BY SELECTED SECTOR: (3) 
Services: (ii) Financial services: Page 141, Paragraph 61:   
The Secretariat notes that "Foreign investment partici pation [in India] is a llowed in both public and 
private sector banks, up to a threshold of 74% for a ll forms of foreign investment (i.e. FDI and FII) in 
private banks, and of 20% in public banks."  On  August 11 2010, however, the RBI released the 
"Discussion Paper on Entry of New Banks in th e Private Sector," seeking feedback from all 
stakeholders and the general public with respect to new private bank licenses.  This discussion paper 
states that:  "Since the objective is to create  strong domestic banking entities and a diversified 
banking sector which includes public sector banks, domestically owned private banks and foreign 
owned banks, aggregate non-resident investment in cluding FDI, NRI and FII in these banks could be 
capped at a suitable level below 50 percent and loc ked at that level for the initial 10 years…this 
[capping foreign investment to below 50% for the initia l 10 years] would be in contrast to the present 
FDI policy which allows 74 percent foreign equity in private sector banking."  When does India 
intend to release final guidelines, and will the new bank licenses cap foreign investment below the current 74% threshold? 
Reply:  Reserve Bank of India has released the Draft Guidelines for Licensing of New Banks in 
the Private Sector on 29 August 2011 on its website for public comments and feedback and has 
given time up to 31 October 2011.  The draft guidelines cap the aggregate foreign investment in the new private sector banks at 49% for the first five years from the date of licensing of the bank. After the expiry of five years from the date of licensing of the bank, the permissible 
foreign shareholding would be as per the extant policy, which is presently at 74%.  The lower 
foreign investment cap in the initial five years for a new private sector bank is stipulated with 
an objective to create strong domestic banking entities. 
U.S. Follow-Up Question:   Could India please explain how it believes limiting foreign investment to 
a level lower than that provided for in its curren t policy framework will contribute to development of 
strong domestic banking entities and a diversified bank ing sector?  Does India believe lowering FDI 
caps will attract more investment? WT/TPR/M/249/Add.2 
Page 54  
 
  Reply: As per the Draft Guidelines for Licensing of  New Banks in the Private Sector released on 
29 August 2011 only entities in the private sector that are owned and controlled by residents would be eligible to promote banks. Further, the promoters would be required to hold a 
minimum of 40% of the paid-up capital of the bank for a period of five years from the date of licensing of the bank. The requirement of a major stake from the promoters in the new banks is 
to ensure support and direction to the bank from the promoters in the formative years to realize 
the vision envisaged for the new bank. Cons istent with these requirements, the aggregate 
foreign investment in the new private sector banks is capped at 49% for the first five years from the date of licensing of the bank. Five years af ter the date of licensing of the bank, foreign 
shareholding would be permitted as per the extant policy, which is 74% for the present. It is felt 
that a new bank would require a time period of at least five years to establish itself, and as such, 
the foreign investment has been capped at 49% for the new banks for a period of five years 
from the date of licensing .  
A final view on all aspects of the Draft Guidelines for Licensing of New Banks would be taken 
after examining the comments and suggestions fr om all stake holders and members of general 
public. 
VIET NAM 1. Chapter 1B. Special Focus Initiatives: (i) Market Diversification: The incentives provided  under Focus Market Scheme have been increased 
from 2.5% to 3%. 
Viet Nam 1:   
Would India be willing to outline key elements in  building incentives provided under Focus Market 
Scheme? 
Reply: Objective of Focus Market Scheme is to offset the high freight cost and other 
externalities relating to select international market.  Details of the Scheme are given in Chapter 3 of Foreign Trade Policy 2009-14 and are available at website dgft.gov.in.   
(ii) Technological Upgradation: The existing 3% EP CG Scheme has been considerably simplified, to 
ease its usage by the exporters. 
Viet Nam 2 :  
Could India clarify the process of simpli fication the existing 3% EPCG Scheme? 
Reply:  Some of the measures undertaken for simp lification of EPCG scheme in the recent times 
are simplification of the EPCG application a nd the documentation required for discharge of 
obligation, introduction of EPCG authorizat ion for Annual requirement, facility of a data 
preparation module for EPCG schemes on an offline mode as well.  These measures have reduced the transaction time significantly.  
 (iii) Support to status holders: additional duty credit scrip @ 1% of the FOB value of past export 
shall be granted for specified product groups includi ng leather, specific sub-sectors in engineering, 
textiles, plastics, handicrafts and jute.  WT/TPR/M/249/Add.2 
 Page 55 
 
 
  Viet Nam  3: 
Could India provide full details of the scientific justification for this incentive? 
Reply:  With an objective to promote investment  in up gradation of technology of some specified 
sectors as listed in the Foreign trade Policy, 20 09-14, Status Holders have been allowed under 
SHIS Scheme, a duty credit scrip @1% of f.o.b. value of exports made during previous financial 
year for import of capital goods required for manufacturing.  
2. Chapter 3. Promotional measures: 
Promotional measures in Department of Commerc e: Assistance to States for Developing Export 
Infrastructure and Allied Activities (ASIDE) 
Viet Nam  4:  
How can DOC manage to manage and allocate sch eme's funds for a number of purposes in which 
some of them belongs to other Ministry's activiti es? How can size of the fund be formulated? What 
could be levels of cooperation between DOC and other Ministries in implementing ASIDE? 
Reply:  ASIDE scheme involves the States in the export effort by providing incentive-linked 
assistance to the State Governments. ASIDE Fu nd allocation by Planning Commission is on 
yearly basis.  The outlay of this scheme has two components. 80% of the funds (State 
component) are earmarked for allo cation to the States on the basis of the approved criteria.  
Funds, are earmarked to the Department of Comm erce by the Central Planning agency i.e. 
Planning Commission. The projects under ASIDE a re then sanctioned as per decided criteria of 
Department of Commerce (DoC).  Since the agencies under the Ministries and State Governments, are the implementing agencies, DoC's role is that of the supervisor which 
oversees that the projects relate to infrastructure improvement for international trade.  Thus, 
there is no conflict of operations. In fact, agencies under other Ministries seek funds under 
ASIDE, to supplement their requirements to take up projects which have not been catered to in 
their own budget.  
Viet Nam 5 :  
Could India share the List of imported item can be benefited from Duty Credit Scrip? And lists of 
imported inputs can enjoy Duty exemption schem es and Duty free import authorization (DFIA) 
scheme, and export promotion capital goods (EPCG) scheme. 
Reply: Duty Credit Scrip may be used for impo rt of inputs or goods including capital goods, 
provided same is freely importable and/or restricted under ITC (HS), barring certain products.  Duty Exemption Scheme such as Advance Auth orisation and DFIA schemes allow access to 
duty free inputs for manufacture of export produc ts. These inputs are allowed as per standard 
input output norms. All items as mentioned at  Para 9.12 of the Foreign Trade Policy 2009-14 
can be imported under the EPCG scheme, unless oth erwise notified.  List of such products are 
available at http://dgft.gov.in. 
__________