World Trade Organization Organisation Mondiale du Commerce Organización Mundial del Comercio

At present in line with the TRIPS Agreement additional protection is available to wines and spirits.

87. Could India provide details of the schemes for promoting exports and investment that provide relief from import duties on intermediate goods? (Page 146, paragraph 2)

Reply: The duty neutralisation schemes such as advance authorisation scheme etc. are given in FTP which has been notified to WTO and is available at http://dgft.gov.in.

88. Could you provide details of fiscal incentive programs and concessional loans and other types of assistance that the Government offers to encourage investment in manufacturing? (Page 146, paragraph 3)

Reply: India has a very liberal FDI policy in place to encourage foreign investments in the manufacturing sector in the country. For instance 100 % FDI is allowed in the telecom equipment manufacturing sector. A comprehensive National Manufacturing Policy is also being contemplated to boost the investment in the manufacturing sector.

89. What are the services sector in India access to which requires certain conditions or permits, and which in some cases may be more restrictive than the explicit limits on investment? (Page 146, paragraph 4)

Reply: The FDI policy, including for the services sectors, is detailed under "Circular 1 of 2011   Consolidated FDI Policy", which is available in the public domain. Any investment, including foreign investment, is, however, subject to applicable laws/sectoral rules/regulations/security conditions.

90. Considering that grant of import permit is an administrative procedure, under which conditions will India consider that this administrative procedure is not considered an import license? How do you interpret the Footnote 1 of the Agreement on Procedures for Import Licensing Procedures? (Page 153, paragraph 23)

Reply: Import permits are primarily to monitor the imports and conformity to quality and standards, e.g. the special import permit for phytosanitary purpose, and does not bestow any restriction on quantum of imports.

91. How does India ensures that the price support programs (in agriculture) do not exceed the country's commitments, since the last notification to the Committee on Agriculture was in 2004? (Page 157, paragraph 35)

Reply: India has not scheduled any aggregate measurement of support (AMS) i.e. "Amber Box" commitments in the Uruguay Round. India's price support programmes have been well within the de minimis as may be seen from India's notifications to the WTO. India's WTO commitments are kept in view while formulating such programmes.

92. The report notes that the policy of allocating funds for specific purposes can cause, among other things, greater financial risks and, in some cases, hinder the recovery of assets. Is India thinking of eliminating this policy? (Page 166, paragraph 62)

Reply: The priority sector includes sectors viz. agriculture, micro and small enterprises, education, housing and micro credit. The activities are wide and varied and as such there is no risk of credit concentration. At present, there is no interest rate ceiling stipulation on these loans. Bank lending to priority sector needs is to be viewed as a viable and profitable business proposition. Further, this facilitates inclusive and equitable growth. We are not thinking of revising the policy. It has proved its efficiency over the years in channelising credit to desired directions.

93. Could you explain the reason why offshore banking units cannot receive or solicit deposits or investments from Indian residents, or open accounts with them? Is it estimated that this restriction may change in the short term? (Page 172, paragraph 79)

Reply: OBUs are virtually foreign branches of Indian banks located within special economic zones (SEZs) which are treated as deemed foreign territory. In view of this, there is need to ring fence the operations of these units. OBUs are, therefore, required to operate and maintain balance sheet only in foreign currency and these are not allowed to deal in Indian rupees except for having Rupee account out of convertible fund to meet their day to day expenses. In the circumstances, OBUs are not allowed to receive or solicit deposits or investments from Indian residents, or open accounts with them.

94. The report notes that even though there is increased competition in the insurance sector, obstacles remain like the limit of 49% in the participation of foreign investment in insurance and reinsurance market, and Insurers must put a certain percentage of their policies on rural and social sectors in India. Can you indicate if you are considering changing some of these limitations? (Page 179, paragraphs 101 and 103)

Reply: The present FDI ceiling in the sector is 26%. The Government of India has introduced the Insurance Laws (Amendment) Bill, 2008, in Parliament. Presently, the Bill is under examination in Parliament. The existing insurance legislation makes it mandatory for insurance companies to place a certain percentage of the policies with rural and social sector. The intention is to spread the liberalization to all sections of the society and work towards financial inclusion. With the rapid growth of the rural economy insurance companies see rural and social sector business as an opportunity and are devising new strategies and plans to tap the huge potential in this area.

95. The report states that foreigners cannot perform activities such as travel agents, tour operators or tourist transport companies. Can you explain the reason of this limitation and if in the short term there would be any amendment? (Page 209, paragraph 187)

Reply: Hotel and tourism sector has been open for FDI up to 100% on automatic basis. This also includes travel agencies and tour operators. The Ministry of Tourism grants approval/recognition to the various service providers in the categories of inbound tour operators, domestic tour operators, tourist transport operator, adventure tour operator and travel agencies as per the revised guidelines dated 18.07.2011.

96. It notes that India has signed 46 bilateral agreements on cooperation in Tourism. Can India indicate the preferences such agreements contain? (Page 211, paragraph 193)

Reply: India has a liberal policy in the sector to promote foreign investment. The details requested in the question can be obtained from the following website: http://tourism.gov.in.

97.  In paragraph 23 of the report of India (WT/TPR/G/249) states "While still a developing country, India is also emerging as a source of investment, which increased from U.S. $ 19,100 million in 2008 2009 to U.S. $ 19,700 million in 2009 2010 to 18,000 million U.S. dollars in 2010 2011 (April to December). Mauritius received the largest share of gross outward FDI in 2010 2011 (April December), followed by Singapore, the United States, the Netherlands and the United Kingdom.

"Moreover, in paragraph 48 of the first section (Economic Environment) Report of the Secretariat (WT/TPR/S/249) states that "Mauritius remains the largest source of FDI, accounting for approximately 40.2 per cent of inward FDI flows in 2009/2010. Part of these large flows may result from the advantages of the tax treaty between Mauritius and India, which may make it attractive for investors to route their investments through Mauritius to take advantage of preferential provisions, which include exemption from the capital gains tax. Other major sources during the period under review were Singapore, the United States, Cyprus and Japan.

"Costa Rica request further clarification regarding the origin of inward FDI, as well as the main destination of India's outward FDI.

Reply: During 2010 11, country wise data show that investments routed through Mauritius remained the largest component of gross FDI inflows to India followed by Singapore and the USA (Table 1).