World Trade Organization Organisation Mondiale du Commerce Organización Mundial del Comercio

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
  
• 
  ExIm Bank lending.
  

As noted as well in the Secretariat's report, product coverage and the level of benefits changed during the period under review and new export contingent schemes were implemented. Moreover, based on publicly available information and recent press reports, many of these programs seem clearly to benefit the textile and apparel sector. In light of the 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 Agreement 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 India 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, several schemes contained in the Secretariat's report are not in the nature of subsidies under the ASCM Agreement and therefore do not require to be notified to the WTO. This issue was discussed in previous 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 need 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 Subsidies 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 would 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.