. /.   WORLD TRADE  
ORGANIZATION  G/ADP/Q1/IND/11 
G/SCM/Q1/IND/11 24 April 2007 
 
(07-1670) 
Committee on Anti-Dumping Practices 
Committee on Subsidies and Countervailing Measures Original:   English 
 
 
 
NOTIFICATION OF LAWS AND REGULATIONS UNDER 
ARTICLES 18.5 AND 32.6 OF THE AGREEMENTS 
 
Questions Posed by the Unites States  
Regarding the Notification of India1 
   
 The following communication, dated 20 April 2007, is being circulated at the request of the 
Delegation of the United States. 
 
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Question 1 
 
Sub-rule (5) of Rule 12 states that, "[w]here the subsidy can be linked to the acquisition or 
future acquisition of fixed assets, the amount of th e countervailable subsidy shall be calculated by 
spreading the subsidy across a period which reflect s the normal depreciation of such assets in the 
industry concerned ...".  What source(s) would Indi a use to determine the appropriate depreciation 
period of an asset for a particular industry?   
Question 2 
 
Section C(a)(i) of Annexure IV indicates that  preferential loans are considered recurring 
subsidies the benefit of which should be expensed in  the period of investigation.  Could India please 
provide further explanation as to how loan subsidies are treated under this legislation?  For example, 
would the benefit be expensed if the loan is a long-term loan ( e.g., longer than one year) tied to the 
purchase of fixed assets?   
Question 3 
 
Section C(a)(i) of Annexure IV states that, in the case of recurring subsidies, "[t]he expensed 
amount should normally be increased by the annual comme rcial interest rate, to reflect the full benefit 
to the recipient, on the assumption that the benefi ciary would have had to borrow the money at the 
beginning of the period and repay it at the end" .  Please explain how this methodology will be 
implemented.  If, for example, a recurring subsidy is received in June, w ill the subsidy benefit be 
increased by the amount of interest that would have  been paid had a commercial loan (in the amount 
of the subsidy) been obtained on January 1, and repaid on December 31?   
                                                      
1 G/ADP/N/1/IND/2/Suppl.4. – G/SCM/N/1/IND/2/Suppl.4.   G/ADP/Q1/IND/11 
G/SCM/Q1/IND/11 Page 2 
 
 
  Question 4 
 
Section C(a)(ii) of Annexure IV states that, "[f]or non-recurring subsidies, which can be 
linked to the acquisition of fixed assets, the total value of the subsidy should be spread over the 
normal life of the assets".  Please explain whether, apart from being linked to the acquisition of fixed 
assets, India uses any additional criteria to dete rmine whether a subsidy is non-recurring.  For 
example, how would India treat a large equity in fusion that was not linked to the purchase of fixed 
assets?   
Question 5 
 
Under the allocation methodology described in section C(a)(ii) of Annexure IV, how would a 
grant of US$100 be allocated over time if the inte rest rate was assumed to be 10 percent and the 
normal depreciation period of the industry concerne d is ten years.  What benefit amount would be 
attributed to each year?   
Question 6 
 
Section C(a)(iii) of Annexure IV states that "[n]on-recurring subsidies which amount to less 
than one percent ad valorem  may normally be considered to be expensed".  Could India please clarify 
if the benefit from such a subsidy would be expen sed in the year of receipt or in the period of 
investigation?   
Question 7 
 
The subsidy benefit calculation methodol ogies for loan guarantee programmes 
(Annexure IV B(c)(ii)) and equity infusion progr ammes (Annexure IV B(f)(v)) do not appear to be 
based on "the benefit conferred on the recipient" .  Instead, for loan guarantee programmes, the 
subsidy benefit calculation methodology appears to be  based on a cost to the government standard, 
while for equity infusion programmes, an anal ysis of the overall record of the programme – 
specifically, the government’s average rate of retu rn from the operation of the programme – appears 
to be the primary focus.  Please explain.   
 
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