World Trade Organization Organisation Mondiale du Commerce Organización Mundial del Comercio

Reply: The principle of Article XVII of GATT applies to these enterprises and the CPSEs operate on commercial considerations and in a non discriminatory manner.

11. 
    How does India ensure the fundamental rights at work as embodied by the ILO's 2008 Declaration on Social Justice for a Fair Globalisation and the 8 core ILO Conventions and are respected by state owned enterprises, in particular those that are engaged in manufacturing or processing destined for export?
    

Reply: India has a comprehensive legal structure for labour welfare and protection. There are roughly 44 central laws and 170 state statutes related to labour regulation. Many laws have followed directly from Conventions framed by the ILO. Whenever an ILO Convention is framed, signatory countries may ratify the Convention and frame corresponding laws in their own legislative system. India has ratified the ILO Convention (No. 81) on labour inspections in industry. India has also ratified several other important Conventions related to minimum wages, equal wages and payment of wages, and has introduced legislation accordingly. Labour inspections are carried out under these laws. Inspections are meant to uphold provisions related to hours of work, wages, safety, health and welfare, and employment of children.

The elaborate system of labour legislation can be classified into four categories, namely, industrial relations laws; wage laws; working conditions laws and social security law. All normal labour laws are also applicable to SEZs, and to state owned enterprises, in particular those that are engaged in manufacturing or processing destined for export, which are enforced by the respective state Governments.

(vii) Export support

WTO Secretariat' s report, page 81, para.145

11. 
    Could India provide information on the "free trade zones": Are these the same as the "special economic zones described in the report? If they are not, please describe eligibility criteria for a company to establish itself in a free trade zone, how many and what type of companies are located in these zones, what type of incentives are provided to the companies concerned and whether those incentives can be quantified.
    

Reply: Facilities available to industries established in a special economic zone are given in SEZ Act, 2005 and SEZ Rules, 2006. SEZ Act and Rules are available on website www.sezindia.nic.in.

WTO Secretariat's report, pages 82 85, para. 148 158

The paragraphs under reference describe operation special economic zones and export oriented units.

11. 
    Could India provide more information concerning labour standards applicable in special economic zones and export oriented units? Please provide information whether there are any differences in legal provisions and practice applied in this respect in special economic zones and export oriented units on the one hand and the rest of the Indian economy on the other hand (i.e. are there any exemptions or special provisions foreseen for the special economic zones and export oriented units)?
    

Reply: All labour laws are applicable in special economic zones. The rights of the workers/labour are therefore protected under the SEZ Act. Under Section 49 of the SEZ Act, 2005 the Central Government has powers to modify provisions of SEZ Act and other enactments relating to special economic zones. However, under this provision, the Central Government cannot relax any Central Act or any rules or regulations made there under, which would affect the welfare of the labour in the SEZs. So, normal labour laws are applicable to SEZs, which are enforced by the respective State Governments.

WTO Secretariat report, page 82, para. 148

11. 
    What kind of entities, including services companies, is located in SEZ? Can India assess the amounts of benefits that these entities receive due to the advantages related to the location in these areas compared to similar entities located in other parts of India that are not subject to these special incentive export schemes?
    

Reply: Out of all the units located in SEZs, majority are in MSME sector and some units are of large size also. The scheme is based on the principles of duty neutralisation of the exported goods. Thus, assessing the amount of benefits is not necessary.

WTO Secretariat's report, page 33, para 82, and page 84 para 153

11. 
    We kindly ask India to provide information on the export processing zones (EPZs), in particular:
    
    1. 
       Could India define them? What are the eligibility criteria for companies to establish themselves in them?
       
    2. 
       Please describe the advantages for companies of establishing themselves there compared to similar entities located elsewhere in India. Can those advantages be quantified?
       

Reply: All the erstwhile EPZs have been converted into special economic zones (SEZ). Facilities available to industries established in a special economic zone are given in SEZ Act, 2005 and SEZ Rules, 2006.  SEZ Act and Rules are available on website www.sezindia.nic.in.

11. 
    What kind of entities, including services companies, is located in the Export Oriented Units that are not SEZ? Can India assess the amounts of benefits that this scheme brings to these entities? Please describe the functioning of the scheme.
    

Reply: Unit undertaking to export their entire production of goods and services except permissible sale in DTA may be set up under the EOU scheme for manufacture of goods including repair, remaking, reconditioning, re engineering and rendering of services.

As the units under the scheme are dedicated to export their entire goods and services except permissible DTA sale, duty on procurement of capital goods, raw material and consumables are deferred for stipulated time period till the export is effected, based on the principles of duty neutralization. Thus, assessing the amount of benefits is not necessary.

EOUs are functioning under the administrative control of the Development Commissioner of Special Economic Zones, under the Department of Commerce in Ministry of Commerce and Industry. Executive control of EOUs is vested with the jurisdictional Commissioner of Customs/Central Excise, Central Board of Excise and Customs in Department of Revenue, Government of India. After receiving Letter of Permission (LOP) from Development Commissioner, the unit applies for Customs Bonding from Customs and Central Excise authority as per the conditions stipulated under relevant notifications. Thereafter, the unit is allowed to import or procure locally, without payment of duty, all types of goods including raw materials, components, packing materials, consumables for manufacture and export expect permissible DTA sale. All movement of goods and services in bonded premises are monitored by bond officers of Customs and Central Excise. Performance of EOUs would be monitored by the Jurisdictional Development Commissioners. In the event of non fulfilment of export obligation as per legal under taking given by the unit, EOUs are liable to pay duty foregone along with interest and penalty as the provisions of Foreign Trade Policy.

WTO Secretariat' s report, page 86, para.159

Regarding the drawback system in India the report lists the two types of drawback currently into operation: the "all industry rate" and the "brand rate".

11. 
    Could India provide statistical data covering the last five years concerning the amounts refunded under every type of drawback and a sectoral breakdown where those refunds are most significant?