World Trade Organization Organisation Mondiale du Commerce Organización Mundial del Comercio

US 70:

Report by the Secretariat (WT/TPR/S/249): III. TRADE POLICIES AND PRACTICES BY MEASURE: (3) Measures Directly Affecting Exports: (vii) Export support: Page 82, paragraph 149 and page 84, paragraph 153:

According to the Secretariat, the SEZs and the Export Oriented Units (EOUs) are exempt from routine customs procedures. Furthermore, according to the Secretariat, "As in the case of the EPZs, the main objectives of the EOU Scheme is to increase exports and foreign exchange revenues, promote the transfer of latest technologies, stimulate direct foreign investment, and generate additional employment." Do India's labor laws apply to these zones? Are there differing standards or regulations for employment in these areas? Does the Ministry of Labour conduct any labor inspections in these zones?

Reply: The SEZ Act, through an amendment brought about by the Parliament, envisages the Central Government shall have no authority to relax any law relating to the welfare of the labour in the SEZs. All labour laws are applicable in special economic zones. The rights of the workers/labour are therefore protected under the SEZ Act. 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.

India has ratified ILO Convention No. 81 concerning Labour Inspection, 1947. An "Area Officer System" is in vogue in the Ministry of Labour and Employment under which the Central Government deputes its officers to visit States in order to ensure proper implementation of labour laws (including in the SEZs).

US 71:

Report by the Secretariat (WT/TPR/S/249): III. TRADE POLICIES AND PRACTICES BY MEASURE: (3) Measures Directly Affecting Exports: (vii) Export support: Page 84, paragraph 155; Page 88, paragraphs 165 167; Page 89 paragraph 173:

In addition to the SEZ and EOU programs, the Secretariat's report describes numerous other programs that appear to be export subsidies. These programs include:

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  Advance Authorization Scheme;
  
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  Duty Free Import Authorization Scheme (DFIA);
  
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  Duty Entitlement Passbook Scheme (DEPBs);
  
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  Focus Market Scheme;
  
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  Focus Product Scheme;
  
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  Status Holder Incentive Scheme;
  
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  Export Promotion Capital Goods Scheme (EPCGS);
  
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  Export and Trading Houses Scheme;
  
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  Target Plus Scheme (TPS); and
  
• 
  Exim Bank lending.
  

As noted as well in the Secretariat's report, product coverage and the level of benefits changed during the period under review and new export contingent schemes were implemented. Moreover, based on publicly available information and recent press reports, many of these programs seem clearly to benefit the textile and apparel sector. In light of the WTO Secretariat's calculations that demonstrate India's exports of textile and apparel products are above the export competitiveness threshold as defined by Article 27.6 of the Agreement on Subsidies and Countervailing Measures (G/SCM/132/Add.1/Rev.1), does India recognize its obligation under Article 27.5 of the SCM Agreement to phase out all export subsidy benefits provided to its textile and apparel sector?⁹ If so, could India please explain what concrete steps India is currently taking to phase out these programs and describe the schedule under which these benefits to the textile and apparel sector will be phased out?

Reply As stated in response to question No. 68, several schemes contained in the Secretariat's report are not in the nature of subsidies under the ASCM Agreement and therefore do not require to be notified to the WTO. This issue was discussed in previous Subsidies Committee meetings including the one held in May 2011. India is committed to meeting its obligations under the Agreement but there are issues which need clarity and common understanding before further action can be taken. These issues have been raised in the Subsidies Committee. Clarity on the definition of "product" for the purpose of Article 27.6 is the starting point for phasing out any subsidies. Another issue is the calculation of the time when the obligation to phase out would begin.