This document contains the advance written questions and additional questions by WTO Members, and replies provided by India.
Organe d'examen des politiques commerciales
2 et 4 juin 2015
EXAMEN DES POLITIQUES COMMERCIALES
Compte rendu de la réunion
Président: S.E. M. Paparizov (Bulgarie)
Le présent document contient les questions écrites communiquées à l'avance par les Membres de l'OMC, leurs questions additionnelles, et les réponses fournies par Inde.
Órgano de Examen de las Políticas Comerciales
2 y 4 de junio de 2015
EXAMEN DE LAS POLÍTICAS COMERCIALES
Acta de la reunión
Presidente: Excmo. Sr. Paparizov (Bulgaria)
En el presente documento figuran las preguntas presentadas anticipadamente por escrito y las preguntas adicionales de los Miembros de la OMC, así como las respuestas facilitadas por India.
TRADE POLICY REVIEW 1
EXAMEN DES POLITIQUES COMMERCIALES 1
EXAMEN DE LAS POLÍTICAS COMERCIALES 1
Reply: No budgetary provision has so far been made during current marketing year 2014-15. 17
Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units 20
100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years. 20
External commercial borrowing by SEZ units up to US $ 500 million in a year without any maturity restriction through recognized banking channels. 20
Exemption from Central Sales Tax. 20
Exemption from Service Tax. 20
Single window clearance for Central and State level approvals. 20
Exemption from State sales tax and other levies as extended by the respective State Governments. 20
Exemption from customs/excise duties for development of SEZs for authorized operations approved by the BOA. 20
Income Tax exemption on income derived from the business of development of the SEZ in a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act. 20
Exemption from Central Sales Tax (CST). 20
Exemption from Service Tax (Section 7, 26 and Second Schedule of the SEZ Act). 21
Controller General of Patents Designs and Trademarks (CGPDTM)/Indian Patent Office 18 36
European Patent Office (EPO)- 125 36
United States Patent and Trademark Office (USPTO)- 23 36
Canadian Intellectual Property Office (CIPO)- 36 36
IP Australia (AIPO)-4 36
United Kingdom Patent & Trademark Office (UKPTO) -3 36
Review of the experience of PPP Policy, including the variations in contents of contracts and difficulties experienced with particular variations/conditions, if any, 43
Analysis of risks involved in PPP projects in different sectors and existing framework of sharing of such risks between the project developer and the Government, thereby suggesting optimal risk sharing mechanism, 43
Propose design modifications to the contractual arrangements of the PPP based on the above, and international best practices and our institutional context, and 43
Measure to improve capacity building in Government for effective implementation of the PPP projects. 43
The Committee may consult various stake holders in the private sector, government sector, legal experts, banking/financial institutions and academia while firming up its recommendations. 43
To provide a stable and sustainable policy environment for foreign trade 58
To link rules, procedures and incentives for exports and imports with other initiatives such as "Make in India", "Digital India" and "Skills India" 58
To promote the diversification of India's export basket 58
To create an architecture for India's global trade engagement with a view to expanding its markets and better integrating with major regions 58
To provide a mechanism for regular appraisal in order to rationalize imports and reduce the trade imbalance. 58
Approved Sector: No specific sector has been approved. It has to be a bonafide business activity. 66
Prohibited Sectors: (a) Real Estate Business, (b) Banking Business and (c) Offering financial products linked to Indian Rupee (e.g., non-deliverable trades involving foreign currency, rupee exchange rates, stock indices linked to Indian market, etc.). 66
Minimum Limit: No minimum limit has been prescribed. 66
Maximum Limit: Up to 400% of the net worth of the Indian party under the automatic route (however, any financial commitment exceeding USD 1 (one) billion (or its equivalent) in a financial year would require prior approval of the Reserve Bank). 66
Exception: ODI funded by way of EEFC balance and ADR/GDR proceeds has no limit. 66
Agricultural and Village industry products 66
Value added and packaged products 66
Eco-friendly and green products that create wealth out of waste from agricultural and other waste products that generate additional income for the farmers, while improving the environment. 66
Labour intensive Products with large employment potential and Products with large number of producers and /or exporters 66
Industrial Products from potential winning sectors 66
Hi-tech products with high export earning potential 66
Costa Rica 72
Dominican Republic 74
European Union 81
Viability Gap Funding (VGF) 82
Take-out finance to reduce long term cost of debt. 82
Multilateral Agencies are allowed to raise Rupee Bonds and carry out Currency Swaps to provide long term debt. 82
Infrastructure Bonds 82
Infrastructure Debt Funds (IDFs) 82
Infrastructure Investment Trust (InvITs) 82
Real Estate Investment Trust (REITs) 82
Use of FE reserves – offshore SPV by IIFCL etc. 82
Enhance production from the existing field by adopting Improved Oil Recovery (IOR)/Enhanced Oil Recovery (EOR) measures using induction of latest technology. 98
Bring into production new discoveries at the earliest. In tune with Government's stated principle of ease of doing businesses, a policy framework for early monetization of hydrocarbon discoveries under PSC regime has been approved by the Government. This policy has addressed rigidities in the timelines of the PSC and has allowed the contractors to start production at the earliest. 34 cases have been already resolved under this policy framework involving resources worth $ 5 billion. 98
Marginal Field Policy (MFP) has been formulated to monetize the marginal fields of ONGC and OIL which have not been monetized for various reasons in the past. Monetization of these discoveries under this policy through International Competitive Bidding (ICB) would also help in boosting Oil & Gas production of the Country. Lucrative fiscal terms with more autonomy is proposed in the policy for making it investor friendly. 98
A new Uniform Licensing Policy (ULP) is being formulated which covers all type of hydrocarbons viz. Conventional Oil & Gas, Unconventional Hydrocarbons like Shale Oil & Gas , CBM, Gas Hydrate etc. This would help in development of all type of hydrocarbons under single license. 98
Revision of prices of domestic natural gas is expected to incentivize production of natural gas in the country. Ministry is also considering to provide premium for gas discoveries in Deep Water, Ultra Deep Water and High Pressure High Temperature (HPHT) discoveries. 98
European Union 105
Hong Kong, China 113
A complete automation in function of Trade Marks Registry 132
The Government has sanctioned 62 posts of regular Examiners and 100 posts of contract Examiners who could be engaged for examination of applications. 132
The office of the Trade Marks Registry has been instructed to take up contested matters which have been settled between the parties and to dispose such cases on basis of settlement. Many special drives for disposal of such cases are set up from time to time and such drives have yielded appreciable results. 132
Possibility of settlement of such cases through mediation is also being explored. 132
Articles 5.2, 5.3, and 6.6 of the AD Agreement, which require that an investigating authority ensure that its determinations have a sufficient factual basis. 172
Article 6.9, which requires investigating authorities, before a final determination is made, to "inform all interested parties of the essential facts under consideration which form the basis for the decision whether to apply definitive measures. Such disclosure should take place in sufficient time for the parties to defend their interests." 172
Article 12 of the AD Agreement, which requires an investigating authorities to make available "in sufficient detail the findings and conclusions reached on all issues of fact and law considered material by the investigating authorities," including "the margins of dumping established and a full explanation of the reasons for the [dumping] methodology used." 172
Could India please explain the justifications for these additional duties and charges, and how they are consistent with India's WTO obligations? 173
Could an exporter or producer obtain the results of the review before production commences? In this way, the exporter or producer will know whether they would be subjected to dumping before they begin the export/production. 174
Should the review of the exporter or producer begin after the production and exports to India, would the exporter or producer be given a rebate of the anti-dumping duties that they have paid since the start of their exports to India should the review determine that the said exporter or producer should not be subjected to anti-dumping duties? 174
Are the reviews in Para 3.69 similar to the mid-term reviews conducted by the DGAD in Para 3.68? If so, would there be a need for the "reasonable period of time i.e. at least one year" to have lapsed as is required for mid-term reviews or would it now be possible for a new exporter or producer to initiate a review less than one year into the imposition of the duty? 174
As per the Rules, the applicant has to be a producer/exporter of the product concerned. 175
The relevant Rules do not provide for any such rebate of anti-dumping duty. 175
The relevant Rules do not prescribe any time limits for making an application for claiming individual dumping margin. 175
the cost of transport of the imported goods to the port or place of importation; 178
loading, unloading and handling charges associated with the transport of the imported goods to the port or place of importation; and, 178
the cost of insurance. 178
generation of additional economic activity; 181
promotion of exports of goods and services; 181
promotion of investment from domestic and foreign sources; 181
creation of employment opportunities; 181
development of infrastructure facilities 181
Chinese Taipei 186
Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units 194
100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years. 194
External commercial borrowing by SEZ units upto US $ 500 million in a year without any maturity restriction through recognized banking channels. 194
Exemption from Central Sales Tax. 194
Exemption from Service Tax. 194
Single window clearance for Central and State level approvals. 194
Exemption from State sales tax and other levies as extended by the respective State Governments. 194
Exemption from customs/excise duties for development of SEZs for authorized operations approved by the BOA. 195
Income Tax exemption on income derived from the business of development of the SEZ in a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act. 195
Exemption from Central Sales Tax (CST). 195
Exemption from Service Tax (Section 7, 26 and Second Schedule) 195
Trinidad and Tobago 196
Can India indicate whether the Trade Facilitation Agreement was a reason for the upgrading of its processes? If no, what were the reasons for upgrading? 196
Does India intend to review its system of import changes in the near future? 196
United States of America 204
Advance search option, wherein users will be able to Search with Command line search, thus giving total control over syntax of database used. Command line search gives option to write queries with full range of operators and parentheses. 222
The InPASS tool will be improved further to include Keyboard shortcuts which will be available to ease of work. 222
The result detail page will present the following information in separate tabs to the user. Users would be able to easily add/remove or configure the positioning of these tabs on the screen. 222
Entire front page – provides front page details for the application 222
Claims – Displays claims of the application 222
Description – Displays description of the application 222
Patent Citation – Displays the patent citations of the application 222
Non-patent citation –Displays the non-patent citations for the application 222
Images – Displays the drawings of the application 222
Application status – Displays the current application’s status. 222
E-register – Displays the patent e-register for the current application 222
Default Search fields option: If no fields are specified, the default search will be performed in basic index (Title and abstract). 222
Index Lookup: Command line search will also have an index lookup facility which gives field specific index terms suggestion as the user types any keywords. 222
Query History Window: Command line search window will also provide a query history window where users can view their current session query history. InPASS will automatically provide a query id to each searched query. 222
Advance search interface: This feature will provide users a facility to search in pre-set search fields that can be combined according to their needs. 222
NATRIP project 233
Setting up of the Automotive Skills Development Council in partnership with Ministry of Heavy Industry for skilling people employed in the entire automotive value chain ranging from component manufacture to vehicle assembly, sales and marketing, servicing, finance, insurance, etc. 234
Introducing of the FAME Scheme to enable faster adoption of electric and hybrid vehicles on a pan-India level. 234
APA regime has been put into place with Roll back provisions. Safe Harbour Rules have also been prescribed for certain sectors. These measures will reduce uncertainty and litigation in the area of transfer pricing. 235
Transfer pricing disputes are also being considered for resolution under the Mutual Agreement Procedure (MAP) between the two competent authorities in terms of Double Taxation Avoidance Agreement (DTAA). 235
The Government will not ordinarily bring about any change retrospectively which creates a fresh liability. Further, it was decided that all fresh cases arising out of the retrospective amendments of 2012 in respect of indirect transfers and coming to the notice of the Assessing Officers will be scrutinized by a High Level Committee which has been constituted by the CBDT before any action is initiated in such cases. Besides, a Committee has also been set up to look into the issue of liability of MAT on FIIs for the period prior to 1.4.2015. 235
The necessary clarity and predictability in the prospective application of the provisions relating to indirect transfer has been incorporated through amendments made by the Finance Act, 2015 by providing reasonable restrictions on its applicability. Its applicability has been narrowed and linked with the percentage voting power of shareholder, management and control and the quantum of Indian assets. 235
All-in-cost of such credit should not be more than 6-month USD LIBOR plus 350 basis points spread; and 238
Maturity of such credit cannot be more than one year in case of imports of raw material; and five years in case of imports of capital goods. 238
Minimum average maturity of three years; and 239
Maximum all-in-cost of 6-month USD LIBOR plus a spread of 350 to 500 basis points. 239
UNITED STATES 240
I. Questions on the report of the Secretariat (WT/TPR/S/313)
Paragraph 3.1 Paragraph mentions that since its last Trade Policy Review in 2011, the main changes in customs procedures include the adoption in 2011 of a self-assessment system aimed at facilitating trade.
Question 1: Could you elaborate on this new system of self-assessment and describe how would it facilitate trade?
Reply: Under the self-assessment regime, the importers/exporters are mandated to assess Customs duty on their own. This self-assessment is subject to verification in terms of its correctness. A Customs. Risk Management System (RMS) enables interdiction of consignments based on risk associated with it and balance consignments are facilitated by the Customs without examination and reassessment. Post Clearance Audit/ Post Clearance Compliance Verification (PCCV) is undertaken after release of goods.
The objective of introducing self-assessment is to repose faith in trade with resultant reduction in dwell time and transaction costs. After introduction of self-assessment the level of facilitation i.e. the number of consignments that are cleared by Customs without examination and reassessment has increased. Paragraph 3.18 The report explains that customs duties are applied and collected under Article 12 of the Customs Act 1962 and Customs Tariff Act of 1975. The basic type is the legal right prescribed in the First Schedule annexed to the Customs Tariff Act. Legal right changes are announced with the annual budget at the end of February each year (in India, the fiscal year runs from April to March). However, the "effective" tariff rate applied in a given year can be very different from the legal right due to exemptions set forth in general terms or in terms of "end user" (reducing the base rate for some users) as well as tariff adjustments made by notices published in the Gazette of India, which can decrease or increase the basic rate. Therefore, the effective rate can vary throughout the year as a result of these changes, which increase the complexity of the tariff and cause uncertainty for traders.
Questions 2: a) Could you explain in more detail why the "effective" rate of duty applied at a certain time of year can be very different from the statutory duty?
Reply: The statutory rate of duty is the rate prescribed under the Customs Tariff Act, 1975. However, under Section 25 of the Customs Act, 1962, the Central Government is empowered to grant exemption from the tariff rate of duty [effective rate of duty]. Accordingly, keeping in view the interests of the domestic industry and consumers and emergent conditions, the government specifies ‘effective’ rates of duty.
Paragraph 3.20 In this paragraph, the report mentions that in the case of lines that alternate duties apply, the Secretariat has used only the ad valorem part of the types to determine fees. Could not have AVEs and, moreover, the specific types include all product-specific exemptions announced during 2013 2014, until 1 September 2014; However, since India grants exemption to a number of products based on the end user, it is not possible to include all exemptions to perform the analysis of the tariff.
Question 3: Could India explain what is the reason why the Secretariat could not have AVEs?
Reply: Ad valorem equivalents of specific rates of duty are not possible since the equivalents would depend on the prevailing customs value of the particular item. However, the rates of duty on these items are within the WTO Bound rates.
Paragraph 3.31 In this paragraph the report states that under Article 25 of the Customs Act 1962, the Central Government may partially or totally exempt from payment of customs duties on imports by notification in the Official Gazette, in the general or under certain conditions.
Question 4: Could you explain in what cases the Central Government may partially or totally exempt imports from payment of customs duties?
Reply: The statutory rate of duty is the rate prescribed under the Customs Tariff Act, 1975. However, under Section 25 of the Customs Act, 1962, the Central Government is empowered to grant exemption from the tariff rate of duty [effective rate of duty]. Accordingly, keeping in view the interests of the domestic industry and consumers and emergent conditions, the government specifies ‘effective’ rates of duty.
Paragraph 3.45 In this paragraph the report states that the licenses are valid for 18 months and the competent authority can extend them for a period of six months, depending on the circumstances; imported material must be used by the importer and cannot sell.
Question 5: What are the specific circumstances under which licenses may be extended for another six months?
Reply: Regional offices of DGFT extend validity of authorization for another six months at the request of the applicant in cases where imports could not be completed in time.
Paragraph 3.51 In this paragraph the report states that India imposes import quotas and the like marble stones (SA 25.1511 million and 25.15121 million) and sandalwood (SA 44,039,922). The quotas are administered each year and MFN. There is no maximum allowable limit per applicant. Applications are examined when received and evaluated according to the criteria specified in the notifications and circulars issued each year by the DGFT.
Question 6: Could India provide details of the procedure for applications for import quotas?
Reply: The procedures are as per notification No 99 dated 20.11.2014, available on the DGFT website (www.dgft.gov.in)
Report by the Secretariat - WT/TPR/S/313 1 ECONOMIC ENVIRONMENT
1.5.1 Composition of trade in goods
Page 19, Paragraph 1.15 Question 1: Can India please provide the value, volume and main destinations of buffalo meat exports since the last Trade Policy Review of India? What proportion of total agricultural exports have been buffalo meat exports, for each year, since the last Trade Policy Review of India?
Reply: Since the last Trade Policy Review of India in 2011, the details of the buffalo meat exports are as under:
Main Export Destinations - Top 5 export destinations of Buffalo Meat
Vietnam; Malaysia; Egypt; Saudi Arab & Jordan
Vietnam; Malaysia; Thailand; Egypt & Saudi Arab
Vietnam; Malaysia; Egypt; Thailand & Saudi Arab
Vietnam; Malaysia; Egypt; Thailand & Saudi Arab
Proportion of Buffalo Exports of Total Agricultural exports (in terms of Value in US$ Million)
Note: Total Agricultural exports include Plantation, Agriculture & Allied Products, Marine Products, Raw Hides And Skins, Other Wood And Wood Products, Silk Raw, Wool Raw, Jute Raw, and Cotton Raw Including Waste.
Source: DGCI&S, Kolkata
2 TRADE AND INVESTMENT REGIME
Page 27, Table 2.1 Question 2: Can India explain why its notifications to the WTO Committee on Agriculture in 2014 were expressed in terms of US Dollars (USD) rather than Indian Rupees (INR), especially as India’s AGST requires that INR be used, as INR was used in India’s previous notifications, and as domestic support measures is actually provided in INR rather than USD?
Reply: Notification of domestic support in US dollars since 1995-1996 has been done in order to provide comparable estimates of the support. India has followed a consistent approach with respect to currency used when notifying its domestic support notifications.
Question 3: Can India explain why it doesn’t use total production as eligible production when calculating market price support?
Reply: India does not procure all the commodities for which MSP is announced. Besides, government does not procure food stocks at administered prices in all the States. Farmers bring their produce for procurement by government agencies only in the event of the market price falls below the Minimum Support Price announced by the government. Thus, only those farmers are benefited whose produce is procured by government agencies. It is for this reason that the quantity procured by government agencies at Minimum Support Prices is taken as the eligible production.
3 TRADE POLICIES AND PRACTICES BY MEASURE
188.8.131.52 Applied tariffs
Page 39, Table 3.3 The Secretariat’s report indicates that the average MFN applied tariff rate for agricultural products in 2014-15 was 36.4 per cent.
Question 4: Can India provide the simple average MFN applied tariff for agricultural products for each of the last 10 years that data is available?
Reply: This data is available is various issues of the publication ‘Tariff profiles’ brought out by the WTO Secretariat every year.
3.1.7 Tariff rate quota
Page 44, Paragraph 3.33 Australia understands that India is the largest producer of milk in the world and its milk production continues to increase. Demand continues to outstrip domestic supply and domestic prices are high by world standards.
Question 5: Can India advise the basis for maintaining tariff rate quotas for milk powders?
Reply: The TRQs are part of India’s scheduled commitments. Apart from having to fulfil certain conditions, importers are free to decide whether or not to avail of these quotas, based on demand, commercial viability and other relevant factors.
184.108.40.206 Import quotas
Page 51, Paragraph 3.51 The Secretariat’s report notes that India maintains import quotas for sandalwood. Australia understands that demand for sandalwood outstrips demand.
Question 6: Can India advise the basis for maintaining import quotas for sandalwood?
Reply: Sandalwood trade is regulated in many countries including India as it is considered a highly restricted tree species. India has put import of Sandalwood under restricted category keeping in view the objectives of conservation of this rare tree and ensuring fair and legal trade. India allows imports of specified quantity every year subject to production of a certificate from the Government authorities of country of export stating that export of sandalwood is legally permitted from the concerned country. In addition, India also requires, the ‘Certificate of Origin’ from the country of export and phytosanitary certificate
3.1.10 State trading
Page 52, Paragraph 3.55 The Secretariat’s report indicates that exclusive rights to import 11 agricultural products were removed from the Food Corporation of India on 29 September 2014.
Question 7: Can India advise whether this means that any company can now apply to import these products?
Reply: Yes, any company can apply.
Page 52, Paragraph 3.56 Question 8: Can India describe what activities are undertaken by the Indian Sugar Exim Corporation Limited state trading enterprise to promote both exports and imports of sugar into India?
Reply: Indian Sugar Exim Corporation Limited (ISEC) is a joint body of the two Apex Associations of the Indian Sugar Industry viz. Indian Sugar Mills Association (ISMA) and National Federation of Cooperative Sugar Factories (NFCSF) which represents over 550 sugar mills in the country. Till sugar season 2013-14, ISEC has been a State trading agency for execution of preferential quota for sugar exports to European Union and USA. ISEC has also helped small sugar companies/cooperative societies to find buyers for their sugar export or help them by importing raw sugar whenever need arises. It has also helped them with the logistics and financial support.
3.1.11 Anti-dumping, countervailing, and safeguard measures
Page 53, paragraph 3.59 Question 9: Australia understands that changes were made to legislation including introducing new rules defining situations that are considered to represent the circumvention of anti-dumping duties, and providing for anti-circumvention investigations to address such circumvention. What types of circumvention activity were added to the legislation and what parties are eligible to apply for an investigation?
Reply: No. 6/2012-Customs (N.T) dated 19th January, 2012 by introducing Rule 25 to 28 in the Anti-dumping Rules. These are available in the public domain (http://www.cbec.gov.in) and have also been notified to WTO (WTO document G/ADP/N/1/IND/4, 1 March 2012). Under the said Rules, the following types of activities amount to circumvention of anti-dumping duty when goods are imported in to India:
Import of goods, subject to anti-dumping duty, in an unassembled, unfinished or incomplete form and assembled, finished or completed in India or in such country to avoid payment of anti dumping duty.
Imports of goods, subject to anti-dumping duty, by altering its description, name or composition.
Imports of goods subject to anti-dumping duty through exporters or producers or countries not subject to anti-dumping duty.
The domestic industry is the eligible party to apply for circumvention investigation under the Rules.
Pages 53-54, paragraph 3.60, section 3.1.11: Question 10: Australia understands that the Directorate General of Anti-Dumping and Allied Duties (DGAD) is able to self-initiate mid-term and sunset reviews. What percentage of mid-term and sunset reviews were self-initiated by the DGAD during the review period? What factors led the DGAD to self-initiate these reviews? Do these factors differ from a request by an interested party who submits positive information substantiating the need for such review?
Reply: During the period of review, DGAD has not self-initiated any midterm or sunset review.
Page 55, paragraph 3.63, section 3.1.11: Question 11: It is unclear from the description of the application of provisional measures from which stage of an investigation India can impose provisional measures. The paragraph states that the following the preliminary finding at day 150 the authority may decide to impose provisional measures. The next sentence says provisional measures may be imposed from day 60. Could the time period from which provisional measures are imposed be clarified?
Reply: Under the Anti-dumping Rules, there is no prescribed time period for issuing preliminary findings. However, the Anti-dumping Rules provide that no provisional duty shall be imposed before the expiry of sixty days from the date of initiation of an investigation.
Page 56, paragraph 3.67, section 3.1.11 Question 12: In regards to the DGAD self-initiating a mid-term or particularly a sunset review, is an investigation always conducted, or are questionnaires from local industry and comments from other interested parties sometimes solely used to determine if there is sufficient grounds for continuation of the measure in force?
Reply: During the period of review DGAD has not self-initiated any midterm or sunset review. Normally, the Designated Authority initiates the proceedings for anti-dumping action on the basis of a petition received from the domestic industry alleging dumping of certain goods and the injury caused to it by such dumping. Rule 5(4) of the anti-Dumping Rules provides for suomoto initiation of anti-dumping proceedings by the Designated Authority on the basis of information received from the Commissioner of Customs or from any other source.
Page 62, Paragraph 3.103 The Secretariat’s report advises there is no mandatory labelling requirement for genetically modified products. Australia understands that the Legal Metrology Act 2009 mandates labelling of genetically modified foods and that this act applies in addition to regulations covered by the Food Safety and Standards Act 2006.
Question 13: Can India clarify requirements for labelling of genetically modified food?
Reply: Import of Genetically Modified Food is being governed by DGFT Notification No.2 dated 7th April, 2006, details of which are available at www.dgft.gov.in. However, the provisions relating to the Genetically Modified articles of Foods, as mentioned under Section 22 of the FSS Act, 2006, are in the process.
3.1.13 Sanitary and phytosanitary requirements
Page 62, Paragraph 3.104 The Secretariat’s report notes that the FSSA is intended to increase transparency of the scientific basis upon which India’s SPS measures are adopted through, inter alia, harmonization with international standards. Australia understands that in early 2013, India advised that the process of harmonising its food standards with Codex Alimentarius standards would be finalised by the end of 2014.
Question 14: Can India provide an update on the process for harmonising its food standards with international standards?
Reply: Draft Notifications have been issued in respect of naturally occurring toxic substances (5th December 2014) and aflatoxins (9th April, 2015) for inviting stakeholder comments. These have also been notified to WTO-SPS committee.
As regards the harmonisation of standards for additives, pesticide residues and heavy metals with those of Codex, they are in the process of harmonisation, would be notified to WTO Secretariat on completion of the process.
220.127.116.11 Export-oriented units
Page 71, Table 3.17 Question 15: Can India provide a further breakdown by product, or product category, for the exports from Export-oriented units in the food/agriculture/forestry sector for the years referred to in table 3.17?
Reply: Breakdown of Export data by product or product category wise from Export-oriented Units in the food/agriculture/forestry sector for the years referred to in table 3.17 is not readily available.
3.2.7 Export finance, insurance and guarantees
Page 72, Paragraph 3.152 Question 16: Can India advise whether the operations of the Export-Import Bank (Exim Bank) of India extend to provide support for trade in agricultural goods? If so, can India please provide a list of the agricultural goods supported by Exim Bank and the value of all export financial support to agriculture?
Reply: Exim Bank of India extends term loans and working capital loans to the units processing agricultural products. Pre-shipment / post-shipment financing is also provided to such units for their export activities. In the year 2014-15, Exim Bank supported export of agricultural products, and the value of such support amounted to ` 13.53 bn, a share of 1.9% in total loan portfolio as on March 1, 2015.
Question 17: Can India also advise whether the 360 day credit duration limit noted in the report, also applies to agricultural goods?
Page 85-86, Paragraph 3.213 While the number of patent applications has been steadily increasing, the number of patents granted has decreased by one-third (Table 3.22). This may indicate that the backlog of patent applications is growing.
Question 18: We note that India has recently joined the WIPO case. Many IP offices including IP Australia have had success using work-sharing tools with other IP offices to increase timeliness and reduce backlogs without compromising patent quality. Has India considered greater use of work-sharing to address this backlog?
Reply: WIPO CASE as well as DAS has not yet been deployed in Indian Patent Office since the up gradation of Data Centre of Indian Patent Office, which is a key requirement for deploying the new modules, is still under process.
India is not part of any work sharing arrangement because examination of a patent application needs to be carried out by the Indian Intellectual Property Office to enable complete compliance with the Patent Act and Rules. However, Section 8 of the Patent Act requires the applicants to provide information on the status of the applications and its prosecution in other jurisdictions. This also assists the Indian patent examiners by providing the material information required to evaluate the application.
The backlog is being addressed through the implementation of the Plan Scheme "Modernization and Strengthening the Intellectual Property Office" under which 252 posts of examiners and 76 supervisory offices have been created recently. Besides this as a special measure 263 contract examiners are also to be recruited for a fixed period with a view to reduce pendency.
Page 87, Paragraph 3.219 We note that India has implemented a special compulsory license regime for exports.
Question 19: Could India provide more information on its anti-diversionary measures and safeguards to protect the interests of patent holders and ensure that the goods produced under the system reach the intended market and are not re-exported?
Reply: Section 92 A of the Indian Patent Act prescribes clearly that the Compulsory licence for export of patented pharmaceutical products shall be available for manufacture and export of such products to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned production to address public health problems, only when the country under reference has already granted a compulsory licence or has, by notification or otherwise allowed importation of the patented pharmaceutical products from India.
The controller shall on receipt of an application in the prescribed manner, grant a compulsory license solely for manufacture and export of the concerned pharmaceutical product to such country under such terms and conditions as specified and published by him.
Application for compulsory license can be made under Form 17 of the Patents Act and Rules
However, no such compulsory licence has been granted in India so far.
Page 88, Paragraph 3.222 The Guidelines for Examination of Biotechnology Applications for Patents provide that biological materials isolated from nature are not patentable subject matter.
Question 20: Could India provide more information on the patentability of biological materials that are related to those produced by nature, but are produced by artificial means? For example can CDNA, human proteins expressed in microbial hosts, genetically engineered microorganisms be patentable subject matter in India?
Reply: According to Section 3 (c) of the Patents Act, the mere discovery of a scientific principle or the formulation of an abstract theory or discovery of any living thing or non-living substance occurring in nature is not a patentable invention. Accordingly, products such as microorganisms, nucleic acid sequences, proteins, enzymes, compounds, etc., which are directly isolated from nature, are not patentable subject-matter. However, processes of isolation of these products can be considered for grant of patents subject to fulfilling the requirements of Section 2 (1) (j) of the Act.
According to Section 3(j) of the Patents Act, plants and animals in whole or any part thereof, other than micro-organisms , but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals are not patentable inventions.
Page 97, Paragraphs 3.265-3.266 Question 21:
Are seizures of suspected IP infringing goods seized under the Customs Act or the Intellectual Property Rights (Imported Goods) Enforcement Rules 2007?
How does the Indian Customs Department determine if there has been an infringement of Patents, Designs or GI’s?
It is acknowledged that identifying infringements for this type of IP can be difficult, particularly in relation to Patents where there can be a large number of patents in place on one product /commodity?
If IP infringing goods are stored for up to six months – Are storage costs incurred and if so who is responsible for those costs?
Is there a cost for a rights holder to record their registered IP with India Customs?
Legislation Governing the Protection of Intellectual Rights by Indian Customs are:
Notification 51/2010 Customs (N.T.) dated 30th June, 2010 issued under Section 11 of the Customs Act, 1962
Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007
While most cases of seizures relate to Trademarks and Copyrights, enforcement for patent, design and GI infringement is also provided for under the Rules. These are carried out on the basis of recordals made by the right holder. Under the enforcement rules, the storage cost of the infringing material is borne by the right holder.
Yes there is a cost for a rights holder to register their notice with Indian Customs
Section 3.2.2 Export taxes, charges and levies
Page 65 & Page 42 Other charges affecting imports Question 22: Is there a website importers/exporters can visit to see all charges, taxes, levies and fees they may have to pay?
Reply: Information regarding charges, taxes, levies and fees to be paid by importers/exporters are be accessed at http://cbec.gov.in and at https://www.icegate.gov.in. A Tax Calculator is also available on both the websites.
Section 18.104.22.168 Special economic zones
Page 68 Question 23: Australia would be grateful if India could expand and provide more detail on the functions and roles of SEZs.
What are the benefits of SEZs (we acknowledge the list of incentives in table 3.14 of the Secretariat's report)?
What can/can't be imported into/exported from SEZs?
What can/can't be done in SEZs? As much detail as possible would be welcome.
Reply: Fiscal benefits available to SEZs are enclosed herewith at Annexure-I
Under Rule 26 of the SEZ rules, 2006, A Unit may export goods and services, including agro-products, partly processed goods, sub-assemblies, components, by-products, rejects, waste or scrap except prohibited items of exports indicated in the Import Trade Control (Harmonized System) Classifications of Export and Import Items, with addition to following conditions:-
i.Export of Special Chemicals, Organisms, Materials, Equipment and Technologies shall be subject to fulfilment of the conditions indicated in the Import Trade Control (Harmonized System) Classifications of Export and Import Items:
ii.If any permission is required for import under any other law, the same shall be allowed with the approval of the Board of Approval
iii.Foreign Trade Policy restrictions on State Trading Enterprises shall not apply to SEZ manufacturing units.
iv.Export of iron-ore shall be subject to the conditions as imposed by the Central Government.
The activities which can be undertaken within a Special Economic Zone are governed by the provisions laid under SEZ Act, 2005 and SEZ Rules, 2006. The same may be referred to for details in the matter.
4 TRADE POLICIES BY SECTOR
4.1.1 General Policy Framework
Page 99, paragraph 4.1 Question 24: Can India please explain the large increases in export volumes of wheat and rice since 2012 given the primary focus of market support prices and public food procurement for these crops is on supporting domestic food security?
Reply: The increase of export of rice is mainly on account of increased export of Basmati Rice from India for which there is no price support provided to the growers by the Government. In case of wheat very small quantities were allowed to be exported from public stocks in the recent years and this was an exception.
Question 25: Are India's Market Support Prices contributing to over-production of these commodities?
Reply: Market support prices are for providing minimum remunerative price to the farmers to prevent them from resorting to distress sale. For most of the commodities under MSP, generally market prices rule above MSP and, therefore, Government is not required to make any procurement. Only when prices are below MSP in the market, Government intervenes. Therefore, for most of the crops, MSP is not necessary for giving a production trigger. In the case of most widely covered commodities under MSP such as wheat and paddy also the procured food grains go into building public stocks for meeting the requirement of distribution under food security programmes.
Question 26: How much wheat has the Food Corporation of India exported since 2010?
Reply: Food Corporation of India has exported 5.80 million tonnes of wheat since 2010.
22.214.171.124 Measures affecting imports
Page 100, paragraph 4.6 Question 27: Can India explain how it defines "self-sufficiency" for the purpose of determining import restrictions on agricultural products?
Reply: The cost of cultivation for the farmers is high in India due to the small size of farm holdings. The small farmers generally produce for themselves and sell the limited surplus in the market. Adopting appropriate import and export policies, therefore assumes great significance for sustainability of farming in India.
126.96.36.199 Measures affecting exports
Page 100, paragraph 4.11 Australia understands that India has 12 agricultural state trading enterprises with export monopoly powers (G/AG/W/125/Add.4) in relation to onions.
Question 28: Can India state how much product, in terms of value and volume, is exported by these STEs (HS codes 07031010, 07108090, 07119090, 07122000) for the last year that statistics are available?
Reply: Data for 2012-13 and 2013-14 is as follows:
Description of product(s) along with HS Code(s)
Total quantity exported by STEs
Average export price
Onion (All varieties)
USD 196.63 PMT
Onion (All varieties)
USD 356.33 PMT
India is also in the process of notifying its STE notification for 2012-13 and 2013-15 very shortly.
Page 100, paragraph 4.12 a) It is widely acknowledged that export subsidies are highly trade-distorting and that the negative spill overs from such measures in the global marketplace do not discriminate between developing and developed nations. With reference to the raw sugar export subsidy program established under the Sugar Development Fund (Amendment) Rules 2014:
Can India explain the WTO legal basis for its export subsidy program, given that India does not have a scheduled entitlement to use export subsidies in the WTO Agreement on Agriculture (AoA), nor can it rely on the entitlements established under Article 9.4 or the AoA, since those entitlements lapsed in 2005?
Reply : As one of numerous steps contemplated / undertaken by the Central Government as well as various State Governments in the country to tackle arrears as payments by sugar mills to Indian sugarcane farmers, it was decided to promote product diversification in the Indian sugar industry by incentivizing raw sugar production, since the industry traditionally produces only white sugar.
The model of the Indian sugar industry is quite different from the models in many other parts of the globe. The sugar mills in the country neither own the sugarcane fields nor undertake contractual cultivation. The raw material for the sugar industry viz sugarcane, is cultivated by an estimated 5 million farmer families who are low income and resource poor on individual land holdings which are extremely small and scattered and in general range from 0.5 to 2 hectares.
The interventions by the government aim to infuse additional liquidity in the severely stretched sector and are linked to cane payments to farmers by the sugar mills.
Can India explain how the export subsidy program is consistent with the declaration made by Ministers at the 9th WTO Ministerial Conference in 2013 (MC9) to "exercise utmost restraint with regard to any recourse to all forms of export subsidies and all export measures with equivalent effect"?
Reply: The intervention is not an export subsidy but is intended to enable sugar mills to make payments to the farmers.
Can India provide the Union budgetary allocation for the program for the 2014/15 sugar marketing year?
Reply: No budgetary provision has so far been made during current marketing year 2014-15.
How many tonnes of exported raw sugar can be potentially subsidised over the 2014/15 sugar marketing year?
Reply: The raw sugar production and marketing incentives is expected to divert the cane equivalent of 0.4 million tons of sugar into raw sugar production.
Reply: About 0.6 million tons of raw sugar, in total, is expected to be exported during 2014-15 marketing year.
b) Australia understands that the export subsidy program has been introduced amidst weak domestic prices for sugar, substantial local stocks and liquidity issues within Indian sugar supply chains.
Can India advise what other measures are currently in place, or are being planned, to compliment or even replace the sugar export subsidy as a policy response?
Is India of the view that export subsidisation stands as a viable policy option, to potentially address issues of over-production in other commodities in the future?
Reply: The Government of India has also put in place a modified Ethanol Blending Program (EBP) policy. Under the EBP policy, 5% blending of ethanol with petrol has been made mandatory. The entire process of procurement of ethanol has been simplified to smoothen the ethanol supply chain. Remunerative prices of ethanol have been fixed. EBP is expected to generated revenue for sugar mills enabling them to make cane price payment to farmers in time.
Page 102, paragraph 4.17 According to India's recent notifications to the Committee on Agriculture, the percentage of poor farmers remains very high. Market price support for Indian farmers has been in operation for many years.
Question 30: Can India explain why such continued Government investment in these domestic support practices has not contributed to any significant reduction in the percentage of poor farmers over the same period?
Reply: Agriculture in India is not remunerative. The share of agriculture and allied sector in gross domestic product (GDP) in 2013-14 was 13.9 % while it contributed 54.6% to the total employment of the country. About 99% of farm holding have less than 10 hectares of land which does not to generate enough income to maintain a minimum standard of living. India's agriculture is subjected to structural disadvantages arising out of small and fragmented land holdings, depletion in soil fertility, lack of access to markets and technology, low level of productivity and incomes.
Page 102, paragraph 4.19 Question 31:
Farmers are guaranteed the Market Support Price (MSP) through the price support scheme – are these prices set and paid for in Indian rupees?
Reply: MSP is set and paid in Indian rupees.
India makes domestic sales of grains at pre-determined prices. Has this grain been procured under the MSP mechanism and how is the pre-determined domestic market sale price actually worked out?
Reply: Government of India is not selling grains domestically at pre-determined prices. The surplus food grains are sold through open tenders in auction mode by fixing a reserve price and no sale is approved below the reserve price.
Can India explain who the buyers of the grain at these pre-determined prices are and whether these buyers can sell onto export markets?
Reply: The buyers are decided on the basis of open tender.
What has been the percentage increase (year on year) under MSP for rice prices since 2008 to 2015?
Reply: The MSP is fixed for paddy. The percentage change over immediate previous year in MSP of Paddy during 2008 to 2015 is as under.
Is India worried that setting such high price increases for MSP contributes to food inflation?
Reply: The rise in MSPs of crops is based on the rise in the inputs cost. Thus, the rises in the level of MSP is to off-set the general price rise in agriculture inputs and protect the farmers from general inflation. Due to reduced weight given to primary agriculture commodities in the Whole Sale Price Index (WPI) basket of goods, increase in MSPs over the years have negligible impacts on food inflation. Further, food inflation largely depends on demand –supply gap of a commodity, purchasing power of the consumers, production and availability, weather and other external factors determining supply of commodity.
Page 103, paragraph 4.22 Procurement under the National Food Security Act aims at providing food grains to around two-thirds of the population (around 800 million people).
How does India ensure that food staples procured by the state for this purpose is stored safely in order to minimise spoilage and waste?
Reply: Food grains are scientifically stored and its quality is maintained in storage till its disposal. Quality Control Wing of FCI imparts curative/ preventive treatments to stocks. During storage, fortnightly/ monthly/ quarterly surprise inspections are done by the Quality Control officials/officers to check the health of grains and overall hygienic conditions of go down and its premises.
What percentage of state procured grains is lost through spoilage and waste?
Reply: Storage losses as well as transit losses with respect to food grains stored with FCI are very minimal and altogether both kind of losses amount to below 1%.
Can India advise whether it plans to implement recommendations of the High Level Committee to amend the National Food Security Act 2013 and reform the Food Corporation of India?
Reply: Government has decided to implement some of the recommendations of the HLC to reform functioning of FCI, however, Government has not decided to make any amendments in the NFSA 2013.
Page 104, paragraph 4.24 The High-Level Committee on restructuring the Food Corporation of India that reporting in January 2015 made several findings about inefficiencies in the Public Distribution System and implementation of the National Food Security Act.
Question 33: When does India anticipate a response to its recommendations?
Reply: The Central Government has required States/ UTs to comply with certain pre-requisites like completion of the ongoing scheme for computerization of TPDS operations, which include putting up digitized list of beneficiaries on transparency portal, putting in place a grievance redressal mechanism etc. as per requirement of NFSA in order to start implementation of the Act.
Page 105, paragraph 4.26 The bulk of India's subsidies are aimed at promoting food security and reducing poverty.
Question 34: Do these subsidies, in particular the market support prices and Government procurement; contribute to encouraging production for export markets, particularly given the export growth in rice and wheat?
Reply: The minimum support price is announced by the government to prevent distress sale by the farmers and to mobilise stocks for food security programmes. It is the minimum remunerative amount fixed based on the cost of production, which farmers should get from the Government in a situation of distress sale. The growth in export of rice has been primarily due to increase in production of Basmati Rice which is not covered under MSP scheme.
Page 105, paragraph 4.27 Soil degradation and water quality issues are often consequences of excessive fertiliser usage and require expensive environmental mitigation efforts.
Question 35: How is India ensuring that subsidised fertiliser input into agricultural production is not negatively affecting the environment?
Reply: Government is advocating soil test based balanced use of fertilizers in conjunction with organic sources of plant nutrients like Farm Yard Manure (FYM), compost, bio fertilizers and green manuring.
Soil Health Management (SHM) programme under National Mission for Sustainable Agriculture -(NMSA) assists in promoting soil test based balanced and judicious use of fertilizers.
Soil Health Card scheme is introduced to issue soil health cards to all farmers in the country. Soil Health Card will provide information to farmers on nutrients status of their soil along with recommendation on appropriate dosage on nutrients to be applied for improving soil health and its fertility.
Report by India – WT/TPR/G/313
3. THE NEW REFORM AGENDA
3.8 Rationalizing subsidies
Page 13, paragraphs 3.12, 3.13, 3.14 Question 36: Does India consider rationalisation of market support prices a priority so that farmers receive more efficient and transparent market price signals from which to base production decisions? What consideration is being given to possible rationalisation of market price support measures?
Reply: Market support prices are used for providing minimum remunerative price to the farmers to prevent them from resorting to distress sale. For most of the commodities under MSP, generally market prices rule above MSP and, therefore, Government is not required to make any procurement. India is constantly working to ensure that delivery of domestic support is improved to ensure that it reaches the intended beneficiaries.
4. TRADE POLICY
4.1 Foreign trade policy
Page 14, paragraph 4.6 India states that "apart from the occasional adjustment in the tariffs on some agricultural commodities in the face of high volatility in food prices, in most cases tariffs have been reduced rather than raised and have generally been continued at the lower levels."
Can India explain whether price volatility alone was the reason for increasing the tariff on raw sugar from 15% to 25% in 2014, and to 40% in April 2015, and if not, what other reasons explain the rapid and steep increase in the tariff rate?
Reply: Adjustments in tariffs, within the bound rates, is based on a number of considerations including international price movements, domestic demand and supply conditions etc.
Can India identify what domestic and/or global price levels are required to allow the tariff to return to 15% or lower?
Reply: It is not possible to identify the price levels required to allow a lowering of tariffs as dynamic interplay of several factors have to be taken into consideration before making tariff adjustment
The 2005 WTO World Tariff Profiles indicated that in 2005, 93% of India's MFN applied tariffs for agricultural goods were greater than 25%, with a tariff peak at 182%. By 2013, 80% of India's MFN applied tariffs were greater than 25%, with a peak at 150%.
Noting India's stated "unwavering commitment to liberalization", can India outline whether there are currently plans to further reduce agricultural MFN tariffs on a unilateral basis, noting that in contrast, around 91% of India's non-agricultural average applied MFN tariffs were below 10% by 2013?
Reply: May refer to the response to a) above. A number of factors underpin tariff policy adjustments and this is not a onetime process.
Public Stockholding for Food Security Question 38: Which elements of the interim decision on public stockholding for food security, agreed by Ministers in Bali, does India consider to be the most important?
Reply: The decision is an important step towards updating the agricultural rules. The commitment to find a permanent solution to the problem is most important factor which will ensure that the genuine concerns of the developing countries are addressed and inherent anomalies and inequities in the WTO Agreement on Agriculture are addressed.
Annex-I: Fiscal benefits and duty concession offered to SEZ Developers and units:
(i) The incentives and facilities offered to the units in SEZs for attracting investments into the SEZs, including foreign investment include:-
Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units
100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.
External commercial borrowing by SEZ units up to US $ 500 million in a year without any maturity restriction through recognized banking channels.
Exemption from Central Sales Tax.
Exemption from Service Tax.
Single window clearance for Central and State level approvals.
Exemption from State sales tax and other levies as extended by the respective State Governments.
(ii) The major incentives and facilities available to SEZ developers include:
Exemption from customs/excise duties for development of SEZs for authorized operations approved by the BOA.
Income Tax exemption on income derived from the business of development of the SEZ in a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act.
Exemption from Central Sales Tax (CST).
Exemption from Service Tax (Section 7, 26 and Second Schedule of the SEZ Act).