World Trade Organization Organisation Mondiale du Commerce Organización Mundial del Comercio

US FQ 26:

(on US 68)

Report by the Secretariat (WT/TPR/S/249): III. TRADE POLICIES AND PRACTICES BY MEASURE: (3) Measures Directly Affecting Exports: (vii) Export support: Page 81, paragraph 145:

The Secretariat's report states that India's latest notification to the WTO Committee on Subsidies and Countervailing Measures included tax incentives provided under the Income Tax Act 1961 and to Export Oriented Units (EOUs). The United States would note that after nearly ten years since its last subsidies notification, India recently notified that it maintained only these three subsidy programs despite evidence to the contrary, as detailed throughout the Secretariat's report. Could India please explain why each of the programs, which are detailed throughout the Secretariat's report, is not subject to the notification obligations under Article 25 of the SCM Agreement? If a program is subject to notification, please do so in accordance with Article 25 of the SCM Agreement.

Reply: Several of the schemes detailed in the Secretariat Report are in the nature of duty exemption/duty remissions and are not in the nature of subsidies within the meaning of ASCM. In those schemes, there is a clear co-relation between the items permitted for import duty free and their quantity with the corresponding export product. There is no element of subsidy in such schemes as there is an appropriate verification mechanism to check whether any excess quantity of duty exempt material has been allowed for import.

U.S. Follow-Up Question: The United States would like to draw India's attention to the following programs that are detailed in the Secretariat's report and are not related in any manner to a legitimate duty drawback mechanism:

• 
  Focus Market Scheme;
  
• 
  Focus Product Scheme;
  
• 
  Status Holder Incentive Scheme;
  
• 
  Export Promotion Capital Goods Scheme (EPCGS);
  
• 
  Export and Trading Houses Scheme; and
  
• 
  Target Plus Scheme (TPS)
  

The United States would ask India to please explain why each of these programs, which are detailed throughout the Secretariat's report, is not subject to the notification obligations under Article 25 of the SCM Agreement?