World Trade Organization Organisation Mondiale du Commerce Organización Mundial del Comercio

A number of social and economic services are provided both at the Centre and in States for which rates of recovery of costs could improve through better user charges.

Revenue from non tax sources could increase with better policies in the use of scarce resources/assets of the nation. The increasing use of auction mode in this regard would help garner resources.

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Report by the Secretariat (WT/TPR/S/249): I. ECONOMIC ENVIRONMENT: (3) Fiscal Policy: Page 7, paragraph 16:

According to the Secretariat, "the 2010/11 Budget recommended bringing expenditure down through a proper targeting of subsidies and announced that new policies to reduce subsidies on fertilizers and petroleum products would be implemented." What is the timeframe within which India plans to announce these new policies and their implementation?

Reply: Consequent to the budget announcement, Indian Government has constituted a task force to recommend and implement a solution for direct transfer of subsidies on PDS kerosene and domestic LPG to the intended beneficiaries. The task force has a mandate to study the present mechanism of transfer of subsidies on fertilizers, kerosene and LPG, the challenges and problems in the governance structures and delivery system, and examine and suggest an implementable solution in the direct transfer of subsidies on kerosene and LPG to intended beneficiaries with the use unique identification numbers. In August 2011, Government has accorded "in principle" approval to the recommendations of the Interim Report of the task force to the phase wise implementation of the direct transfer of cash subsidy for LPG and Kerosene. Accordingly, initiatives have been taken for launch of pilot study to introduce the changes as proposed in the interim report. The final report of the task force is yet to be submitted to the Government. The Government will take a suitable action after detailed deliberations on the recommendations proposed by the task force.

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Report by the Secretariat (WT/TPR/S/249): I. ECONOMIC ENVIRONMENT: (3) Fiscal Policy: Page 8, paragraph 19:

"The authorities are confident that tax rationalization will allow corporate and personal income tax collection to continue growing rapidly and help improve the prospects of revenue led medium term consolidation. However, indirect taxes, including taxes that fall solely or mainly on imports, continue to be an important source of revenue, and changes in their levels are a much used policy tool." How does India's continued use of such indirect taxes benefit the country's infrastructural and developmental needs, and how do such taxes and changes in their levels impact India's global competitiveness pursuit?

Reply: The Central Government's indirect tax collection accounts for 39.5% of total tax revenue (2009 10). Although customs revenue still contribute significantly to indirect tax collections, their share has fallen consistently over the years. Besides, the direction of change in customs tariffs has been downward over these years. The money thus collected is used for infrastructure development and poverty alleviation programmes.

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Report by the Secretariat (WT/TPR/S/249): I. ECONOMIC ENVIRONMENT: (3) Fiscal Policy: Page 8, paragraphs 20 22:

What are the prospects for finalizing the proposed GST and Direct Taxes Code, what steps are necessary for them to be enacted into law, and what is the expected timeframe for their implementation?

Reply: The Direct Taxes Code Bill, 2010 was introduced in the Parliament in August, 2010. It is currently being examined by the Standing Committee on Finance of the Parliament. Once the report of the Standing Committee is received, the Government, after considering the report, shall finalize the Bill for enactment by Parliament.

For finalizing the proposed GST, the first step is an amendment in the respective taxation powers of the Union and the States, provided in the Constitution. The implementation of the GST is, therefore, contingent on a Constitutional Amendment Bill, which has been tabled in Parliament in March 2011.

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Report by the Secretariat (WT/TPR/S/249): I. ECONOMIC ENVIRONMENT: (7) Developments in Foreign Direct Investment: Page 18, paragraph 48:

The Secretariat notes that Mauritius remains India's largest source of FDI. Who are the foreign direct investors that are eligible to obtain preferences such as exemption from the capital gains tax? How does a foreign direct investor qualify for such preferences and where can the rules governing these preferences be found?

Reply: The information relating to the FDI policy can be found at the website of DIPP at www.dipp.nic.in and the information relating to exemption from capital gains tax can be found on the website of Income Tax Department at www.incometaxindia.gov.in.

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Report by the Secretariat (WT/TPR/S/249):II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES: (1) Overview (2) Trade Policy Formulation and Implementation: (ii) Trade policy formulation, implementation, and objectives: Page 23, paragraph 12:

How does the Indian government make/coordinate its trade policy? Please identify and describe India's trade and investment policy process. What is the interagency mechanism through which the various institutions involved in India's trade policy decision making must vet their positions to arrive at an Indian government consensus on its trade and investment policy and negotiating positions?

Reply: This is achieved through a process of continuous dialogue with all stakeholders including industry associations, apex chambers, export promotion councils etc. to obtain sectoral feedback. Intra governmental consultations are also held on cross cutting issues before formulating the trade policy and the negotiating positions.

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Report by the Secretariat (WT/TPR/S/249): II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES: (1) Overview (2) Trade Policy Formulation and Implementation: (ii) Trade policy formulation, implementation, and objectives: Pages 24  25, paragraphs 14 15:

The Secretariat Report states: "Trade policy seems to be lacking an overall thrust and is being conducted mostly on a sector or product basis. This has resulted sometimes in actions with an anti export bias (such as setting minimum export prices or applying export taxes), in contrast with the asserted general goal of seeking export expansion." How does India characterize its overall trade policy thrust? Does India envision that its long term objective "to accelerate the export growth rate to 25% per annum and double India's share in global trade by 2020" will be attainable in the global market as it exists today, or do global markets need to grow ever larger to accommodate India's export goals? And, does India consider that its own market must be increasingly open to achieve its own economic growth to be able to feed its export potential? How will India achieve its future export goals if it is faced with the global marketplace as it stands today?