World Trade Organization Organisation Mondiale du Commerce Organización Mundial del Comercio

Reply: India conducts its anti dumping proceedings consistently with the obligations as per the WTO agreements and by taking cognizance of jurisprudence.

Kingdom of Saudi Arabia 4:

Report by the Secretariat (WT/TPR/S/249): III. Trade Policies and Practices by Measure (4) Measures Affecting Production and Trade: (i) Incentives (b) Other support

Paragraph 179 states that "'[o]ther subsidies', which account for 3% of the total explicit subsidies in 2010/11, include market intervention and price support schemes for agricultural products." This section is qualified by footnote 233, which states that "[t]he term 'subsidy' in this section is used as in India's Budget and other official documents, and not in the sense of the WTO Agreement on Subsidies and Countervailing Measures."

Question: In light of this language, would India consider any price support schemes to constitute countervailable subsidies under the Agreement on Subsidies and Countervailing Measures (SCM Agreement)? Or does India believe that price support schemes are outside the scope of the SCM Agreement?

Reply: The definition of a subsidy under Article 1 of ASCM, inter alia, includes under Article 1.1(a)(2) a financial contribution by a government or public body where there is any form of price support in the sense of Article XVI of GATT 1994. Further by such financial contribution a benefit should be conferred and a subsidy shall be subject to the provisions of Part V only if such a subsidy is specific in accordance with the provisions of Article 2. Article XVI of GATT refers to subsidies in general which operate directly or indirectly to increase exports or reduce imports of a product. Therefore, any price support per se cannot be termed as a "countervailable subsidy".

Kingdom of Saudi Arabia 5:

Report by the Secretariat (WT/TPR/S/249): III. Trade Policies and Practices by Measure (4) Measures Affecting Production and Trade (i) Incentives (b) Other support

Paragraph 180 states that "[s]ubsidies for domestic liquefied petroleum gas and kerosene under the Public Distribution System (PDS), and for freight⁵, were put in place in 2002 after the dismantling of the administered pricing mechanism (APM), with the aim of protecting the poor." This section is also qualified by footnote 233, which states that "[t]he term 'subsidy' in this section is used as in India's Budget and other official documents, and not in the sense of the WTO Agreement on Subsidies and Countervailing Measures."

Question: Can India please elaborate on why it does not consider these "subsidies," in particular the price control/support mechanisms, to constitute subsidies under the SCM Agreement.

Reply: Kindly refer to India's reply to previous question.

Kingdom of Saudi Arabia 6:

Report by the Secretariat (WT/TPR/S/249): III. Trade Policies and Practices by Measure:(4)Measures Affecting Production and Trade:(iv)Price Controls

Paragraphs 208 218 describe various price controls applicable in India ranging from petrochemical goods to pharmaceuticals.

Question: Does India consider price controls to constitute countervailable subsidies or create a "particular market situation" under the SCM Agreement?

Reply: Please see the response to question 4 and 5 above. We do not find reference to "particular market situation" similar to Anti dumping Agreement in the ASCM.

Kingdom of Saudi Arabia 7:

Report by the Secretariat (WT/TPR/S/249): III. Trade Policies and Practices by Measure (4) Measures Affecting Production and Trade (iv) Price Controls

Paragraphs 213 215 describe India's administered pricing mechanism (APM), which regulates the pricing for petroleum products and notes that prices under production sharing contracts must be approved by the GOI. Furthermore, the TPR notes that the retail price of diesel is still under control.

Question: Does India consider the sale of petroleum products under any of these price control measures to constitute a countervailable subsidy or particular market situation pursuant to the SCM Agreement?

Reply: Please see response to question 4 above.

Kingdom of Saudi Arabia 8:

Report by the Secretariat (WT/TPR/S/249): III. Trade Policies and Practices by Measure (4) Measures Affecting Production and Trade (iv)Price Controls

Paragraph 215 states that "[t]he Government closely monitors the price of certain hydrocarbons. In case of high price volatility in the international market, the Government will intervene to stabilize prices."

Question: Can India elaborate on the circumstances under which it will intervene to stabilize prices? Does India consider such circumstances to constitute a "particular market situation" under the SCM Agreement?

Reply: Government has been monitoring the prices of administered petroleum products viz. diesel, PDS kerosene and domestic LPG. It has been decided to stagger de administering the prices of diesel to minimize the overall impact on poor and vulnerable segment of the population. The prices of PDS kerosene and domestic LPG are administered since these are essential for cooking and lighting purposes.

India does not consider that stabilization of prices in this case would constitute "particular market situation". Moreover, we could not find reference to "particular market situation" similar to Anti dumping Agreement in the ASCM.

Kingdom of Saudi Arabia 9:

India's Report (WT/TPR/G/249)

Paragraph 71 states that India "has been subjected to a disproportionate number of trade defence actions" and that "[o]ut of the 90 anti dumping measures taken against India during the period January 1995 to June 2010, 22 relate to chemicals, 19 to plastics, 11 to textiles and 26 to metal products (mainly iron and steel) – areas in which India has gained a degree of comparative advantage globally in recent times.

Question: Does India believe that the "disproportionate" number of trade defence actions is unwarranted under WTO agreements? If so, please explain the basis for India's belief that such actions are unwarranted (i.e. how are they contrary to WTO agreements).

Reply: Dumping causing injury to the domestic industry is an unfair trade practice and has to be dealt with as per the Anti dumping Agreement. However, such anti dumping actions have to be fair and taken in accordance with the provisions of the Agreement.

KOREA, REPUBLIC OF

Republic of Korea 1:

Government Report, pages 17 18, paragraphs 49 51

Over the past few years, India has implemented reforms to rationalize and simplify its tax system. However, companies investing in India still have concerns over the uncertainty of tax burden caused by high tax rates, complex tax items, and discretionary tax administration, among others. Could the Indian government elaborate the efforts it is making to alleviate such concerns?

Reply: The consistent policy of the Government with regard to tax rates has been to levy moderate rates of tax on a wide tax base. The tax rates (inclusive of surcharge and cess) in the case of corporate tax payers have been moderated over the last two years. The tax rate for domestic companies for financial year 2009 10 was 33.99%. This has been gradually reduced to 33.2% for financial year 2010 11 and to 32.4% for financial year 2011 12. The Direct Taxes Code Bill, 2010, which is currently before Parliament proposes a corporate tax rate of 30% for domestic companies.

As part of economic reforms, tariffs have been lowered substantially in recent years. The tariff structure has been simplified considerably. However, this is an on going process. The present duty structure is simple though there are certain exemptions. It is Government's endeavour to gradually remove exemptions which are no longer relevant in the changed circumstances.

Steps have been taken to simplify the process of assessment of customs duties. With the adoption of the Electronic Data Interchange (EDI) system and automation of businesses, the rates of duty and exemptions are automatically determined. Further, greater reliance is being placed on automated processes (such as EDI, Risk Management System etc.) to reduce human intervention in business process.

India proposes to introduce a comprehensive goods and service tax to replace the existing system of domestic taxes both at the Centre (excise duties and services tax) and the States (state VAT, sales tax etc.). The Central Government has introduced a Constitution Amendment Bill in Parliament in February, 2011 to enable levy of this tax.

Republic of Korea 2:

Secretariat Report, page 30, paragraph 30

Although entrepreneurs are free to select the location for setting up businesses in India, the establishment of a company still remains subject to zoning, to land use regulations at the state level, and to environmental regulations at the central level, which leads to restrictive investment environment. Recently, it seems that it is increasingly difficult for foreign investors to invest in India due to excessive environmental regulations. For example, Korea's POSCO has been struggling to start a steelworks project in Orissa for six years. The company has been faced with the lack of regulatory clarity between the Central Government and States as well as strict environmental regulatory restrictions. It also has difficulty in purchasing land because of residents' opposition. Could India take appropriate measures to address these issues in a timely manner?

Reply: The requirement for obtaining a clearance for undertaking a non forest activity in a forest area is mandated under Forest Conservation Act, 1980. This requirement applies to all project proponents whether state/central government departments or state/central PSUs or Indian companies or foreign companies. The environment clearance is mandated by EIA Notification under Environment Protection Act, 1986 and is similarly applicable to all kinds of project proponents. These requirements are national in nature in light of the Indian circumstances. The case of POSCO was dealt under the existing rules/regulations at par with other project proponents under similar circumstances.

Republic of Korea 3:

Secretariat Report, pages 63 65, paragraphs 85 90

Even though the issue of anti dumping measures taken by India was pointed out in its last Trade Policy Review, India's dependency on the measures has increased during the current review period. Since 2006, India initiated 209 investigations and undertook 207 final measures (as of 31 December 2010), compared with the reported numbers of 176 and 177, respectively, in the last Review. There are concerns that frequent use of anti dumping measures can impose considerable burden on foreign exporters and might lead to unfair trade. Does India have a plan to review and improve its anti dumping policies?

Reply: The purpose of anti dumping duties, in general, is to address the injury caused to the domestic industry by the unfair trade practices of dumping. Anti dumping investigations are carried out strictly as per India's Customs Tariff (Identification, Assessment and collection of anti dumping duty on dumped articles and for determination of injury) Rules, 1995 as amended and in conformity with the provisions of the WTO Agreement on implementation of Article VI of the GATT 1994.

Republic of Korea 4:

Secretariat Report, pages 72 73, paragraph 119

With regard to SPS measures, the Indian Central Government passed the Food Safety and Standards (FSS) Act in 2006. However, as the rules and regulations to operationalize this Act have not been announced, the Act does not seem to be at the stage of full implementation. When will the Act be fully implemented? How does India assess the impact of the Act on its trading partners' exports to India when it is fully implemented?

Reply: The FSS Rules, 2011 were notified on 5 May 2011 and FSS Regulations, 2011 were notified on 1 August 2011. This has shifted the regulatory control from multi agencies to a single agency in the country. This would lead to a reduction in the time for obtaining licences and getting clearances for imports.

Republic of Korea 5:

Secretariat Report, pages 76 79, paragraph 131 141

Recently, India's export restrictions and prohibitions have been strengthened. According to the Secretariat Report, export taxes for raw materials and relevant products, such as iron ores and concentrates, chromium ores and concentrates, and products of iron and steel, were introduced in 2009. Also, products including non basmati rice, wheat, pulses, and edible oils have been newly subject to export prohibitions since 2007. As such, there is a growing concern over the possibility that export restrictions and prohibitions by some countries can act as a risk factor against the world economy as the situation in the raw material and food markets has become highly unstable. As a result, due consideration is needed in the implementation of export restriction and prohibition measures. Could India provide its position on this issue?

Reply: India's production of certain items to meet its domestic demand like pulses and oilseeds is deficient. In addition, production of certain essential basic food grains like wheat and rice fall on account of draught and other natural calamities. During such times, India imposes export restrictions on specific crops. India accords highest priority to her food security and policies are tailored to reduce impact on vulnerable sections of the society.

Republic of Korea 6:

Secretariat Report, page 123, paragraph 299

In recent years, India has made substantial efforts to ensure the effective enforcement of intellectual property rights. According to the Secretariat Report, the number of cases of imports confiscated because of IPR infringement increased from 23 in 2008/09 to 56 in 2009/10. How did the ratio of the number of confiscated cases to the frequency of random checks change during the same period?

Reply: Indian Customs does not keep a record of the ratio of the number of confiscated cases to the frequency of random checks.

It would be pertinent to mention in this context that cases resulting in confiscation are a result of and are dependent on many factors such as risk profiling, specific intelligence inputs on the case and cooperation extended by the right holder. Random checks may or may not result in detection of an offence case relating to IPR violation.

Republic of Korea 7:

Secretariat Report, page 134, paragraphs 35 36

India is supporting its agriculture through various policies such as the Price Support Scheme (PSS), Market Intervention Scheme (MIS), and a number of other agricultural support programs. Could India provide its position on the concerns that there may be overlap or inefficiency in the sheer variety and complexity of the agricultural support programs?

Reply: There is no overlap between the commodities covered under the Price Support Scheme (PSS), and perishables covered under the Market Intervention Scheme (MIS). 25 specific commodities such as paddy, maize, cotton, soybean, wheat, etc. are covered under PSS for which Minimum Support Price (MSP) are announced before the start of the crop season. Market Intervention Scheme (MIS) operations are taken under exceptional circumstances when farmers are forced to make distress sale of their perishable crops on account of excess supply.

Republic of Korea 8:

Secretariat Report, page 158, paragraph 122

According to the Secretariat Report, 173 licenses have been issued in the mobile telecom segment since 2004. However, Table IV.10 shows that there were only 15 mobile telephony providers in India's mobile telecom sector in 2010. Could India explain the reasons for the significant gap between the two figures?

Reply: The entire country is divided into 22 service areas and licenses are issued service area wise. Thus one telecom operator may have 22 licenses, hence the difference.

Republic of Korea 9:

Secretariat Report, pages 169 171, paragraphs 166 173

Under its GATS schedule of specific commitments, unlike international maritime and air transport, India has not opened road transport services including passenger and cargo services. Could the Indian government explain the reasons not to open this sector? Or has it taken any measures liberalizing this sector irrespective of GATS commitments?

Reply: The road transport sector is largely open in India. FDI is permitted up to 100% on the automatic route, subject to applicable laws/sectoral rules/regulations/security conditions in passenger and freight. Similarly, FDI is permitted upto 100% on the automatic route, subject to applicable laws/sectoral rules/regulations/security conditions in the cargo segment as well.

Republic of Korea 10:

Secretariat Report, page 157, paragraph 119

The DoT controls four government owned telecom companies, including BSNL and MTNL. Could India provide the percentage of state ownership in each of these companies? Does India have any plan to privatize these state owned companies?

Reply: Bharat Sanchar Nigam limited (BSNL): 100%; Mahanagar Telephone Nigam Limited (MTNL): 56.25%; Telecommunications Consultants India Limited (TCIL): 100%; ITI Limited: 92.87%.

No such proposal is presently under consideration.

Republic of Korea 11:

Secretariat Report, page 157, paragraph 119

Having an active market for telecom resale services is believed to be a good way to promote new market entries, which in turn will lead to greater competition and consumer welfare. Does India have any plan to invigorate its resale services market?

Reply: Presently resale is permitted only in respect of IPLC (international private leased circuits) through a separate licence.

Republic of Korea 12:

Secretariat Report, page 158 159, paragraphs 122 125

According to the Secretariat Report, India allows 74% foreign ownership for internet service providers and 100% foreign ownership for infrastructure service providers.

As far as Korea understands, India explained that infrastructure service providers were internet service providers in its previous communications. Yet a category titled "internet service providers" exists separately from "infrastructure service providers" in the Secretariat Report. Could India provide the definition of infrastructure service provider and explain how it is different from internet service provider?

In general, telecom regulators do not regulate service providers that do not have any network infrastructure or telecom facilities. Hence, internet service providers without gateways can be considered as value added service providers that are subject to little or no foreign investment restrictions. Could India provide the reasons of maintaining foreign ownership restrictions for the internet service providers without gateways?

It appears that India's revised offer on services allows only 49% foreign ownership for basic services and 74% foreign ownership for value added services. Meanwhile, foreign equity ceiling for value added services is 100% in its relevant domestic law. Does India have a plan to reflect what is in the existing domestic law in its services schedule?

Reply: Infrastructure providers are passive infrastructure providers like telecom tower, duct and dark fibre providers. For infrastructure providers 100% FDI is permitted subject to certain conditions. For Internet service providers 74% FDI is only permitted.

MALAYSIA

Malaysia 1:

Report by the Government of India (WT/TPR/G/249), Page 21, paragraph 65

65. India's export performance exceeded the target of US$200 billion in 2010 11 by US$46 billion. India now aims to achieve exports of US$500 billion by 2013 14, with a compound annual growth rate of 26.7%, through quality upgradation of export products; export of high technology products; diversification of markets; expansion of the export basket; and moving up the value chain.

Could India please elaborate on the measures it undertakes to upgrade the quality of export products?

Reply: India believes in quality products to be made available at reasonable competitive prices. A large number of products follow the BIS standards (primarily based on international standards) and a number of products require quality checks before exports. Export of products manufactured by quality certificate holders such as ISO certificates is encouraged. Some of the support measures have been detailed in Chapter 1B of the Foreign Trade Policy (2009 2014). The FTP has been notified to WTO and is also available at http://dgft.gov.in.

Malaysia 2:

Report by the Secretariat (WT/TPR/S/249 01),Page x, paragraph 7

7. ...In order to meet these objectives, India implements a mix of policies including tax incentives, export promotion, and credit facilitation schemes, to "neutralize" the cost of imported inputs used in exports; however, such schemes may contribute to the complexity of India's trade regime….

• 
  What are the measures undertaken to reduce the complexity of India's trade regime?
  

Reply: Exercise to simplify the procedure and reduce the transaction cost has already been taken. Continuous dialogue with all stakeholders is a permanent feature of policy making and taking mid course corrections.

• 
  Are there any plans to standardize or streamline taxes across the states in India?
  

Reply: The states have powers to levy certain taxes given in list II of Schedule VII of the Constitution of India. Therefore States can fix tax rates as per their requirements, which vary across states. However the proposed goods and service tax (GST) is likely to bring a fair degree of uniformity on tax related to supply of goods and services, which is the main source of states' revenue. For further details Para 51 of the Governments Report (WT/TPR/G/249) may be referred.

Malaysia 3:

Report by the Secretariat (WT/TPR/S/249 01), Page xi, paragraph 15

15. Imports may also be subject to non tariff barriers including prohibitions, licences, and restrictions, as well as packaging, quality, and sanitary requirements. Import restrictions may be imposed on grounds of, inter alia, health, safety, moral and security reasons, and for self sufficiency and balance of payments reasons. …

Could India please elaborate on the reasons behind the imposition of local content requirements for local sales of solar product in India and mandatory use of domestic solar and cells modules in solar projects?