World Trade Organization Organisation Mondiale du Commerce Organización Mundial del Comercio

In India, there are several categories of rural workers and the most prominent among them are: agriculture labourers, construction workers, beedi workers, blacksmiths, fishermen, forest workers, etc. For the categories of workers mentioned above, several forms of organizations exist in the country, for example there are trade union organizations for agricultural labourers, construction workers, forest and wood workers, etc. In addition, there are general workers organizations which consist of rural workers from various categories. The important rural workers' organizations in the country are: Bharatiya Khet Mazdoor Union and the All India Agricultural Workers' Union. In addition to these, there are several central unions, for example Bharatiya Mazdoor Sangh, Indian National Trade Union Congress, etc. have their own rural workers' wings.

US 9:

Report by the Secretariat (WT/TPR/S/249): I. ECONOMIC ENVIRONMENT: (2) Recent Economic Developments: Page 6, paragraph 12:

How does international trade in goods and services – both exports and imports – specifically contribute to the Indian government's efforts to confront the country's poverty alleviation challenges?

Reply: Trade in goods and services contribute both directly and indirectly in poverty alleviation. India's employment oriented exports like leather products, gems and jewellery, textiles, handicrafts and carpets provide huge employment opportunities. India also exports many forest products, handicrafts and agricultural products which help people in the rural areas, tribal and backward communities. Similarly, service exports like tourism provide direct and indirect employment to different strata of society which constitutes nearly 9.2% of the total employment in the country. Government has also initiated the skill development mission, providing appropriate training, technology upgradation etc to these employment oriented export sectors.

US 10:

Report by the Secretariat (WT/TPR/S/249): I. ECONOMIC ENVIRONMENT: (3) Fiscal Policy: Page 6, paragraph 14:

"Since," according to the Secretariat, "tax revenue continues to be insufficient to finance India's infrastructural and developmental needs," what tools does the Indian government have to address each of these needs? What role do trade and investment play in its plans?

Reply: A roadmap on fiscal consolidation that will reduce the debt to GDP ratio will help in unlocking more resources from Government revenue in future to be used for developmental programmes instead of debt servicing. The roadmap envisages prudential expenditure management through which the Government of India will generate resources to meet the development needs of various sectors. As part of expenditure correction, the Government has a established a practice of extending targeted food subsidies to the poor in cash in order to bring down overall subsidy related liabilities. The public sector is vastly enhancing its use of the Public private partnership (PPP) mode for project financing. This enables fiscal space for the provision of public goods in development sectors where such finance is unlikely to be forthcoming.

A number of social and economic services are provided both at the Centre and in States for which rates of recovery of costs could improve through better user charges.

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.

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Report by the Secretariat (WT/TPR/S/249): I. ECONOMIC ENVIRONMENT: (3) Fiscal Policy: Page 7, paragraph 16:

According to the Secretariat, "the 2010/11 Budget recommended bringing expenditure down through a proper targeting of subsidies and announced that new policies to reduce subsidies on fertilizers and petroleum products would be implemented." What is the timeframe within which India plans to announce these new policies and their implementation?

Reply: Consequent to the budget announcement, Indian Government has constituted a task force to recommend and implement a solution for direct transfer of subsidies on PDS kerosene and domestic LPG to the intended beneficiaries. The task force has a mandate to study the present mechanism of transfer of subsidies on fertilizers, kerosene and LPG, the challenges and problems in the governance structures and delivery system, and examine and suggest an implementable solution in the direct transfer of subsidies on kerosene and LPG to intended beneficiaries with the use unique identification numbers. In August 2011, Government has accorded "in principle" approval to the recommendations of the Interim Report of the task force to the phase wise implementation of the direct transfer of cash subsidy for LPG and Kerosene. Accordingly, initiatives have been taken for launch of pilot study to introduce the changes as proposed in the interim report. The final report of the task force is yet to be submitted to the Government. The Government will take a suitable action after detailed deliberations on the recommendations proposed by the task force.

US 12:

Report by the Secretariat (WT/TPR/S/249): I. ECONOMIC ENVIRONMENT: (3) Fiscal Policy: Page 8, paragraph 19:

"The authorities are confident that tax rationalization will allow corporate and personal income tax collection to continue growing rapidly and help improve the prospects of revenue led medium term consolidation. However, indirect taxes, including taxes that fall solely or mainly on imports, continue to be an important source of revenue, and changes in their levels are a much used policy tool." How does India's continued use of such indirect taxes benefit the country's infrastructural and developmental needs, and how do such taxes and changes in their levels impact India's global competitiveness pursuit?

Reply: The Central Government's indirect tax collection accounts for 39.5% of total tax revenue (2009 10). Although customs revenue still contribute significantly to indirect tax collections, their share has fallen consistently over the years. Besides, the direction of change in customs tariffs has been downward over these years. The money thus collected is used for infrastructure development and poverty alleviation programmes.

US 13:

Report by the Secretariat (WT/TPR/S/249): I. ECONOMIC ENVIRONMENT: (3) Fiscal Policy: Page 8, paragraphs 20 22:

What are the prospects for finalizing the proposed GST and Direct Taxes Code, what steps are necessary for them to be enacted into law, and what is the expected timeframe for their implementation?

Reply: The Direct Taxes Code Bill, 2010 was introduced in the Parliament in August, 2010. It is currently being examined by the Standing Committee on Finance of the Parliament. Once the report of the Standing Committee is received, the Government, after considering the report, shall finalize the Bill for enactment by Parliament.

For finalizing the proposed GST, the first step is an amendment in the respective taxation powers of the Union and the States, provided in the Constitution. The implementation of the GST is, therefore, contingent on a Constitutional Amendment Bill, which has been tabled in Parliament in March 2011.

US 14:

Report by the Secretariat (WT/TPR/S/249): I. ECONOMIC ENVIRONMENT: (7) Developments in Foreign Direct Investment: Page 18, paragraph 48:

The Secretariat notes that Mauritius remains India's largest source of FDI. Who are the foreign direct investors that are eligible to obtain preferences such as exemption from the capital gains tax? How does a foreign direct investor qualify for such preferences and where can the rules governing these preferences be found?

Reply: The information relating to the FDI policy can be found at the website of DIPP at www.dipp.nic.in and the information relating to exemption from capital gains tax can be found on the website of Income Tax Department at www.incometaxindia.gov.in.

US 15:

Report by the Secretariat (WT/TPR/S/249):II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES: (1) Overview (2) Trade Policy Formulation and Implementation: (ii) Trade policy formulation, implementation, and objectives: Page 23, paragraph 12:

How does the Indian government make/coordinate its trade policy? Please identify and describe India's trade and investment policy process. What is the interagency mechanism through which the various institutions involved in India's trade policy decision making must vet their positions to arrive at an Indian government consensus on its trade and investment policy and negotiating positions?

Reply: This is achieved through a process of continuous dialogue with all stakeholders including industry associations, apex chambers, export promotion councils etc. to obtain sectoral feedback. Intra governmental consultations are also held on cross cutting issues before formulating the trade policy and the negotiating positions.

US 16:

Report by the Secretariat (WT/TPR/S/249): II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES: (1) Overview (2) Trade Policy Formulation and Implementation: (ii) Trade policy formulation, implementation, and objectives: Pages 24  25, paragraphs 14 15:

The Secretariat Report states: "Trade policy seems to be lacking an overall thrust and is being conducted mostly on a sector or product basis. This has resulted sometimes in actions with an anti export bias (such as setting minimum export prices or applying export taxes), in contrast with the asserted general goal of seeking export expansion." How does India characterize its overall trade policy thrust? Does India envision that its long term objective "to accelerate the export 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? And, does India consider that its own market must be increasingly open to achieve its own economic growth to be able to feed its export potential? How will India achieve its future export goals if it is faced with the global marketplace as it stands today?

Reply: A strategy paper has been prepared on the subject and it is available at the Department of Commerce website http://commerce.nic.in.

US 17:

Report by the Secretariat (WT/TPR/S/249): II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES: (4) Investment Regime: (i) Business environment: Page 29, paragraph 26:

The Secretariat states: "The World Bank estimates that it takes 29 days at a cost of some 56.54% of GNI per capita to start a business in India. In 2010, India ranked 165 out of 183 economies for ease of starting a business, up from 168 in 2009." To what factors does India attribute this low ranking, notwithstanding India's efforts to improve its business climate? What additional measures is India considering to improve its business environment in an effort to achieve its trade and investment goals?

Reply: The report of the World Bank is not representative of the business environment across the country. The sample size and the statistical universe are very limited in size. Government is reviewing the FDI policy and regulations, on a continuing basis, with a view to their further liberalisation and increasing their investor friendliness.

US 18:

Report by the Secretariat (WT/TPR/S/249): II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES: (4) Investment Regime: (i) Business environment: Page 30, paragraph 30:

The Secretariat states: "Prior environmental clearance is required for all domestic or foreign companies planning a project in an area listed in the Schedule to the 2006 Environmental Impact Assessment (EIA) Notification." Having taken due note of http://www.moef.nic.in/legis/env_clr.htm, we would like India to clarify its public process for obtaining prior environmental clearance. Please identify which parts of the process are open to the public and the means by which they are made public. Please explain the process by which an interested party can appeal the government's environmental clearance decision.

Reply: The environmental appraisal of developmental projects is undertaken under the provisions of the Environmental Impact Assessment (EIA) Notification, 2006, which provides for screening, scoping, public consultation and the final appraisal for the environmental clearance.

After preparation of the draft Environmental Impact Assessment (EIA) Report, the same is put in public domain for organizing the public consultation. The EIA Notification, 2006 provides the details of the process of public consultation including the procedure, panel, videography etc. The issues raised in public hearing are required to be incorporated in the final EIA Report. The project proponents are given an opportunity to make the presentation during appraisal of the project by the sector specific expert appraisal committees (EACs). For benefit of all stake holders and for maintaining transparency, the Ministry's website displays the agenda, proceedings of the EAC meeting, environmental clearance letter etc. and is updated regularly.

The EIA Notification, 2006 is uniformly applicable to the projects of the Central Government, state Government, public sector undertakings, private entrepreneurs, joint ventures as well as foreign companies.

The Appeal against the environmental clearance or rejection can be made before the National Green Tribunal established in 2010.

US 19:

Report by the Secretariat (WT/TPR/S/249): II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES: (4) Investment Regime: (ii) Foreign investment regime: Page 32, Paragraph 38:

The Secretariat's Report notes that FDI in LLPs is allowed with FIPB approval, in sectors where 100% FDI is permitted and where FDI is not linked to any performance conditions. In which sectors is FDI linked to performance conditions? What precisely are those conditions?

Reply: The sectors inter alia include "non banking finance companies" and "development of townships, housing, built up infrastructure and construction development projects" where performance conditions, including fulfilment of a minimum capitalisation norm, are to be fulfilled.

US 20:

Report by the Secretariat (WT/TPR/S/249): II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES: (4) Investment Regime: (ii) Foreign investment regime: Pages 32 33, Paragraph 39:

The Secretariat's Report notes that the number of sectors/activities in which FDI is prohibited by India has increased during the review period. Please confirm whether the Secretariat's statement on this issue is correct? If so, what is the policy rationale for increased prohibition on FDI, in light of India's stated intention to liberalize its investment regime? The Secretariat's Report also notes that between April 2007 and December 2009, the FIPB approved 949 FDI proposals with total investment of Rs. 404 billion. How many FDI proposals, if any, were declined during this period? On what basis are FDI proposals declined?

Reply: The list of sectors prohibited under both the Foreign Exchange Management Act and FDI Policy as extant at the time of the earlier review, was subsequently consolidated under the FDI policy, which is available in the public domain. Only one additional sector i.e. "manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes" has since been added. This has aligned the policy with Government's earlier decision of not permitting industrial licenses for fresh capacity in the sector.

During the period April 2007–December 2009, 102 proposals were rejected mainly on the grounds of being not in compliance with the FDI policy.

US 21:

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:

The Secretariat's Report notes that, despite liberalization of foreign equity caps, specific market access conditions or permits applicable to FDI can be more restrictive than explicit investment caps. What are the various conditions and permits applicable to FDI in India, outside of equity caps? Is information about these conditions included in the Consolidated FDI Policy issued by the Department of Industrial Policy and Promotion? Is India considering reducing or eliminating these conditions and permits, in light of their restrictive impact on investment?

Reply: The Consolidated Circular on FDI Policy (available at www.dipp.nic.in) details information related to the FDI policy, including the applicable FDI cap, entry route (i.e. whether Government approval is required or otherwise) and other linked conditions. Investment in any sector is also required to comply with applicable laws/sectoral rules/regulations/security conditions.

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 guidelines call "domestic content requirements," which require that certain solar equipment used by developers 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.

US 23:

Report by the Secretariat (WT/TPR/S/249): III. TRADE POLICIES AND PRACTICES BY MEASURE: (1) Introduction: Page 35, paragraph 3:

The Report by the Secretariat states "As a result of an amendment of the legislation as of 2010, safeguard measures may also take the form of quantitative restrictions." This amendment has not been notified to the WTO Safeguards Committee. When does India plan to notify this amendment to the appropriate WTO Committee?

Reply: "Amendment to the Foreign Trade (Development and Regulation) Act (FTDR Act) was made through an Amendment Act of 2010 in August 2010. This inter alia, included insertion of Section 9A giving powers to the Central Government to impose Quantitative restrictions as safeguard measures. Framing of Rules to implement these provisions is under consideration of the Central Government. As the Rules to implement these provisions were not framed, the above amendment to the FTDR Act could not be notified to the WTO Safeguard Committee earlier. However, India is taking steps to notify the above amendments to the FTDR Act to the Safeguard Committee. As and when the implementing Rules will be notified, the same will also be informed by India to the Safeguard Committee".

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 market 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 per cent preference for the procurement of domestically produced electronics. The April 2011 TRAI recommendations on domestic telecom equipment manufacturing impose similar obligations on licensees and characterize their purchases as government 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 government 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.

US 25:

Report by the Secretariat (WT/TPR/S/249): III. TRADE POLICIES AND PRACTICES BY MEASURE: (2) Measures Directly Affecting Imports: (i) Customs procedures: Page 36, paragraph 8:

The report indicates that importers, with a few exceptions, must register with the Director General of Foreign Trade (DGFT) to obtain an importer exporter code (IEC) number to be able to import commercially. Who is excepted from registering and what are the criteria for exception?

Reply: The details are available at para 2.8 of the Handbook of Procedure Vol. 1 and is available at DGFT website http://dgft.gov.in.

US 26:

Report by the Secretariat (WT/TPR/S/249): III. TRADE POLICIES AND PRACTICES BY MEASURE: (2) Measures Directly Affecting Imports: (i) Customs procedures: Page 36, paragraph 9:

The report sets forth the six regimes for entry of imports and states that imports for home consumption may be cleared after payment of the duties and charges. Does the regime for home consumption provide for release of the goods upon provision of a guarantee where there is a delay in the final determination of the customs value of the goods, as required by Article 13 of the Customs Valuation Agreement (CVA)? If so, please indicate where in India's legislation this is set forth and provide additional details on the circumstances in which such release is authorized. How long must the "delay" be for Indian Customs to authorize such release? If India does not provide for such release, how does it implement CVA Article 13?

Reply: The regime for home consumption provides for release of the goods upon provision of a guarantee where there is a delay in the final determination of the customs value of the goods. Sometimes, it is not possible to finally determine the customs value of the goods due to non availability of some relevant information and/or documents. Withholding release of goods in such cases may cause hardship to the importers by way of payment of demurrage/detention charges, disturbance in production schedule and other financial losses. To meet such exigencies, provisions have been made in Section 18 of the Customs Act, 1962 (details may be viewed at www.cbec.gov.in) to assess the duty provisionally and to authorize release of the goods upon submission of a security by the importer pending final determination of the customs value.

No timeline has been laid down to measure the "delay" for the purpose of authorizing the release of goods. The Customs Valuation Agreement (CVA) does not provide any threshold to measure the "delay".

US 27:

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 11:

Authorities report that 0.67 million registered IEC holders use EDI facilities. How many registered IEC holders are there in total?