Trade policy review report by the secretariat

3.1.5  Tariff concessions

1. 
   Under Section 25 of the Customs Act, 1962, the central Government may, by notification in the Official Gazette, exempt generally or absolutely or subject to any stated conditions, imports from the whole or part of the customs duty leviable. The majority of such tariff concessions are announced with the Annual Budget through a notification by the Ministry of Finance (Department of Revenue) and are provided under the various schemes to encourage exports and investment (Section 3.3.1). However, tariff concessions and exemptions may also be announced throughout the year through notifications issued in The Gazette of India. The concessions can be either product- and tariff-line-specific but many are also based on end-or industrial-use and therefore difficult to include in the overall analysis of the tariff.
   
2. 
   According to data provided by the authorities and available in the Budget, total customs revenue forgone as a result of tariff concessions is around 25% of total revenue; it has been falling from 39% at the time of the previous Review in 2009-10 to 25.3% expected for 2013-14.
   

3.1.6  Tariff rate quotas

98. 
    India scheduled tariff rate quotas (TRQs) on five lines at the HS six-digit level: skimmed milk powder and whole milk powder, granules or other solid forms (HS 0402.10 and 0402.21), maize (HS 1005.90), sunflower-seed or safflower seed oil and fractions thereof, crude oil (HS 1512.11), and rape, colza or mustard oil and fractions thereof (HS 1514.90).²³ These are equivalent to 12 tariff lines at the eight digit level (Table 3.6). The quotas are allocated by the DGFT and the eligible importers are state-trading companies including the National Dairy Development Board (NDDB), the National Agricultural Cooperative Marketing Federation of India (NAFED), State-Trading Corporation (STC), Minerals and Metals Trading Corporation (MMTC), the Projects and Equipment Corporation of India (PEC), Spices Trading Corporation Limited (STCL) and State Cooperative Marketing Federations, depending on the product. Imports by these importers may only take place on behalf of actual users and must be cleared by customs before 31 March of each financial year.²⁴
    

Table 3.16 Products subject to tariff rate quotas, 2010-14

Description	Code	In quota rate	Out of quota (MFN) rate	Annual quota quantity (in-quota imports) (metric tonnes)
				2010-11	2011-12	2012-13	2013-14
MFN TRQs
Skimmed milk and cream in powder or granules or other solid forms	0402.10 0402.21	15%	60%	30,000 (raised to 50,000)	50,000	10,000	10,000
Maize (corn), other than seed quality	1005.90	zero	50%	450,000	450,000	500,000	500,000
Crude sunflower or safflower seed oil	1512.11	50%	2.5% for sunflower and 75% for safflower	150,000	150,000	150,000	150,000
Rape, colza or mustard oil and fractions thereof	1514.90	45%	75% for crude and 10% for refined.	150,000	150,000	150,000	150,000
Natural rubber	4001.21 4001.22 4001.29	7.5%	20% or Rs 30, whichever is lower	40,000	40,000	n.a.	n.a.
Butter and other fats	0405.10 0405.90.10 0405.90.20	zero	30%	15,000	15,000	15,000	15,000
Preferential TRQs
India-Sri Lanka FTA
Textiles and clothing	HS 61 and HS 62	5%	10%	8 million pieces (at least 6 million from fabrics of Indian origin)	8 million pieces (at least 6 million from fabrics of Indian origin)	8 million pieces (at least 6 million from fabrics of Indian origin)	8 million pieces (at least 6 million from fabrics of Indian origin)
Tea	2101	15%	30%	15 million kg	15 million kg	15 million kg	15 million kg
Bangladesh (SAFTA)
Textiles and clothing	HS 61 and HS 62	zero	10%	8 million pieces	10 million pieces	n.a.	n.a.
Dessicated coconut	08011100	30%	70%	500	500	500	500
Pepper	0904	zero	zero	2,500	2,500	2,500	2,500
Vanaspati, bakery shortening and margarine	1516, 1517, or 1518	zero	zero	250,000	250,000	250,000	250,000

n.a. Not applicable.

Source: WTO Secretariat, based on WT/LET/440, 4 April 2003; WTO document G/AG/N/IND/5, 7 March 2011; and Notifications 59/2012 – Customs, 21 November 2012; 78/2011 – Customs, 19 August 2011; 51/2013 – Customs, 20 December 2013; 26/2000 – Customs, 1 March 2000; 2/2007 – Customs, 5 January 2007; 42/2011 – Customs.

1. 
   In addition to these scheduled TRQs, India has had TRQs in place for rubber (HS 4001.21, 4001.22 and 4001.29, equivalent to seven lines at the eight-digit level) since 2010; according to the authorities, the TRQs were removed on 1 March 2012. In-quota duties for these products were 7.5% compared to the current applied MFN rate of the lower of 20% or Rs 30/kg.²⁵
   
2. 
   India last notified its imports under TRQs to the WTO in 2011 for the marketing years 2003 2004 to 2009-2010.
   
3. 
   India also maintains bilateral TRQs under its regional trade agreements. TRQs for imports of clothing and tea and also dessicated coconut, pepper and vanaspati are maintained under its FTA with Sri Lanka. Imports of textiles and clothing from Bangladesh under the South Asian Free Trade Area (SAFTA) were subject to TRQs whose quantity was raised from 8 million pieces to 10 million in 2011; the TRQ was removed on 9 November 2011.²⁶