Wt/tpr/M/313/Add. 1 31 July 2015

EU follow up question: The EU understands that India requires foreign companies to have an Indian legal representative for the purpose of the certification and marking to act on behalf of the applicant. Such a legal representative acts on behalf of a foreign applicant. Could India further explain why – in addition of requiring a domestic representative – it also requires a bank guarantee from foreign manufacturers?
Reply: Legal representative on behalf of foreign applicant is liable for legal actions in case of any violation whereas the bank guarantee is for covering the loss of revenue which may arise on the part of foreign manufacturers 
Page 62 para 3.103 – labelling
The license number and FSSAI logo can indeed be added in an affixed label. However, other essential information (list of ingredients, expiration date –given for illustration-) cannot be added and have to be printed in English or Hindi directly on the package because FSSAI regulations prohibit the use of stickers. This restricts market access to India and nullifies reciprocity, as most Indian trade partners, including the EU and the US, allow the use of stickers.
Reply: The core information regarding list of ingredients, nutritional value, Best Before or Use by dates etc. can only be provided by the manufacturer and no one else and hence have to be on the main label. The label has to be an inseparable part of the container and as per the Packaging & Labelling Regulations; all information should be grouped together and displayed in one place. Hence permitting additional stickers as a means of information from any other source or even the manufacturer is likely to compromise with sanctity of information which is the basic requirement for a consumer for making informed choices.
Page 65 para 3.122 - export taxes
EU Question 50: Further to the information provided on export taxes, could India provide additional information on the preferential transport fees applicable for the export of certain raw materials?
Reply: Issues related to transport fees are not a taxation matter.
EU follow up question: Could India provide information on preferential/special transport fees applicable to certain goods that are destined for exportation?
Reply: It is re-iterated that transport fees are not a taxation matter and the exporter is at liberty to opt for any mode of transport given commercial considerations.
Page 68 para 3.134 - subsidies.
Page 75, para 3.164 - banking regulation
EU Question 55: Could India provide further information on what measures are taken in case a bank does not meet the priority sector lending targets?
Reply: Scheduled Commercial Banks having any shortfall in lending to priority sector shall be allocated amounts for contribution to the Rural Infrastructure Development Fund (RIDF) established with NABARD and other Funds with NABARD/NHB/SIDBI, as decided by the Reserve Bank from time to time. The interest rates on banks' contribution to RIDF or any other Funds, tenure of deposits, etc. shall be fixed by Reserve Bank of India from time to time.
Non-achievement of priority sector targets and sub-targets will be taken into account while granting regulatory clearances/approvals for various purposes.
EU follow up question to question 55: Could India provide information if in the past any banks were subject to the RBI decision to contribute to the RIDF? Could India clarify what regulatory clearances/approvals would be affected in the case of a bank does not comply with priority sector lending targets?
Reply: All Scheduled Commercial Banks with shortfalls in priority sector targets have been contributing to RIDF as per the extant policy. The policy sets a level playing field for the banks.

In terms of RBI's guidelines, non-achievement of priority sector targets and sub-targets will be taken into account while granting regulatory clearances/approvals for various purposes. Branch licensing is such an example.

Page 86 para 3.216. The Supreme Court of India in its judgement [Novartis A.G. vs. Union of India] said that "The amended portion of Section 3(d) clearly sets up a second tier of qualifying standards for chemical substances/pharmaceutical products in order to leave the door open for true and genuine inventions but, at the same time, to check any attempt at repetitive patenting or extension of the patent term on spurious grounds." Further it was said that "efficacy" should be understood as "therapeutic efficacy", which must be judged "strictly and narrowly". In paragraph 190 of the judgement, the Court held that "in whichever way Section 3(d) may be viewed, whether as setting up the standards of "patentability" or as an extension of the definition of "invention",
Page 100 Paragraph 4.12-Measures affecting exports.



The report states that on 12 February 2014 the Indian Government approved a subsidy at the rate of Rs 3,300 per tonne towards marketing and promotion services of raw sugar. The scheme continues during the current sugar season 2014-15 and on top of that, Indian regional Maharashtra government has decided in April to grant an additional export subsidy of Rs1,000 per tonne of raw sugar.
EU Question 75: In the light of the above, could India explain:
a. How it interprets the "implementation period" as referred to in paragraph 9.4 of the Agreement on Agriculture and the end data of it.

b. What are the rules in India governing the granting of export subsidies by the regional authorities? Are regional governments bound by the commitments India has taken in the WTO?
Reply: The Hong Kong Ministerial Declaration makes it clear that developing countries would continue to be exempt from reduction commitments on export subsidies listed in subparagraphs (d) and (e) of paragraph 1 of Article 9 of the Agreement on Agriculture. Therefore, Members which are benefiting from S&D treatment during the implementation period would continue to benefit from such provisions till a new agreement is in place. In the spirit of the on-going reform process under Article 20 of the Agreement on Agriculture, while developed Members continue to provide huge export subsidies, developing countries should not be deprived of S&D treatment during the interim period which is only a fraction of what is being given by the developed countries.
EU follow-up questions:
a.The EU would like INDIA to clarify which developed WTO members continue to provide exports subsides for sugar, as indicated in the previous response.

In addition, the EU thanks India for the explanation and wishes to follow-up on the issue which includes systemic concerns for the EU, including possible breach of country's WTO commitments justified by the developing country status of the country.

b.According to the Secretariat's background document G/AG/W/125/Rev.2 on export subsidies, only less than five countries continue to grant export subsidies in compliance with their scheduled commitments whereas export subsidy expenditure has clearly fallen significantly over the past years. At the same time the Article 9:4 subsidies have been used by at least ten developing countries and the trend is up. That kept in mind and in the light of India's views on Hong Kong Ministerial Declaration providing a legal basis for developing countries to continue to be exempted from reduction commitments on export subsidies, Could India clarify the following:

i.What are India's export subsidy reduction commitments in Section II of Part IV of India' schedule of concessions which India allegedly continues to benefit of until a new agreement is in place?

ii.What is the legal effect of the Hong Kong Ministerial Declaration on Section II of Part IV of the schedules of the WTO members?

c.The EU would also like to submit again the question on the same issue which have not been replied by India: What are the rules in India governing the granting of export subsidies by the regional authorities? Are regional governments bound by the commitments India has taken in the WTO?

Replies:
a) As long as the Doha Round remains unfinished, Members can continue to provide export subsidies subject to product-specific reduction commitments within the limits specified in the Schedule of the WTO Member concerned. 
(b) India has reserved the right to use export subsidies under the Uruguay Round Agreement on Agriculture. The Hong Kong Ministerial Declaration makes it clear that developing countries would continue to be exempt from reduction commitments on export subsidies listed in subparagraphs (d) and (e) of paragraph 1 of Article 9 of the Agreement on Agriculture. Therefore, Members which are benefiting from S&D treatment during the implementation period would continue to benefit from such provisions till a new agreement is in place.
(c) The commitments undertaken by India in the WTO are national commitments.
Page111, para 4.58 Services
EU Question 84: Could India explain what are the costs to be borne by foreign commercial banks with respect to the new policy on priority sector lending. Is India's government considering covering part of these costs?
Reply: Priority sector loans are competitive loans and the extant guidelines on priority sector do not lay down any preferential rate of interest for such loans. As such banks do not incur any additional cost for lending to priority sectors as compared to non-priority sector loans.
EU follow up question to question 84: Could India clarify why when priority sector loans are considered competitive ones, does India imposes a certain target for such loans?
Reply: Priority sector refers to those sectors of the economy which, though viable and creditworthy, may not get timely and adequate credit in the absence of this regulatory thrust. These include loans to farmers for agriculture and allied activities, micro and small enterprises, poor people for housing, students for education and other low income groups and weaker sections.

RBI's priority sector guidelines do not lay down any preferential rate of interest. Banks in India are free to determine their lending rates according to their Board approved policies.

Page 113 para 4.70 - banking services
EU Question 85: Could India provide further information on how the principle of reciprocity is considered in practice for the purpose of the "Scheme for Setting up Wholly-Owned Subsidiaries by Foreign Banks in India"? What are the criteria for determining reciprocity for the purpose of the Scheme? Have India determined reciprocity of a foreign country for the Scheme already? If so, which one?
Reply: The policy on presence of foreign banks in India has followed two cardinal principles of (i) Reciprocity and (ii) Single Mode of Presence. These principles are independent of the form of presence of foreign banks. Therefore, these principles continue to guide the framework of the future policy on presence of foreign banks in India. In general, foreign banks organized as WOS would enjoy greater freedom in terms of opening of branches.
The factors taken into account while considering applications for setting up WOS in India include, inter alia, the economic and political relations with the country of incorporation of the parent bank and reciprocity with home country of the parent bank.
EU follow up question to question 85: Could India further clarify how political relations are taken into account of assessing reciprocity for bank regulatory issues? Could India clarify what authority assesses the political relations in this respect? Could India provide a response to the questions weather India had determined reciprocity of a foreign country for the Scheme already? If so, which one?
Reply: As a part of the process of examination of any application of a foreign bank for presence in India, the aspects relating to reciprocity is looked into by the Government of India. The guidelines related to bank regulation and supervision are the same for all banks, and no differential treatment is accorded to any bank.
The applications of foreign banks for presence in India are examined on the basis of two cardinal principles of (i) reciprocity and (ii) single mode of presence. These principles are independent of the form of presence of foreign banks. These principles continue to guide the framework of the policy on presence of foreign banks in India including that of wholly owned subsidiaries of foreign banks in India.
Page 124, Para 4.114-cabotage
EU Question 90: Could India indicate to what extent the exemptions from cabotage restrictions granted in the years 2012-2013-2014/2015 referred to trading of international cargoes (e.g. feedering and relay practices) and/or movement of empty containers?
Reply: The details of chartering permission given to foreign flag vessels, are as mentioned below:

Year	2012-13	2013-14	2014-15
International Cargoes	1180	1082	1650
Empty containers	0800 TEUs  export-import containers from Nhava Sheva to Mundra Port and back, granted on 05.12.12	1000 x20' and 700x40' import empty 600x20' 2500 TEUs from Nhava Sheva to Mundra in the lay can 28.10.13 to 29.11.13 granted on 04.11.13	1. 500 TEUs empty containers from Nhava Sheva to Pipava Port granted on 27.06.14   2. 500 TEUs empty containers from Nhava Sheva to Mundra Port granted on 11.07.14   3. 1000 TEUs empty containers from Nhava Sheva to Pipava Port granted on 16.07.14.   4. 1000 TEUs empty containers from Nhava Sheva to Mundra Port granted on 25.07.14.   5. 1000 TEUs empty containers from Nhava Sheva to Mundra Port granted on 11.08.14.

With regard, specifically, to signalling systems under the terms of a guideline issued by the Railway Board, suppliers of software embedded electronics systems and technology products for railway signalling are obliged to set up indigenous manufacturing and testing facilities in India. Furthermore, the same suppliers shall commit to a progressively phased indigenization programme of supply in respect of manufacturing that must reach 100% in three years time further to the market entry.
EU follow up question to question 90: Could India indicate to what extent the exemptions from cabotage restrictions granted during the years 2012 to now referring to trading of international cargoes (e.g. "feedering and relay practices") and/or movement of empty containers?
Reply: EU Question No. 90 has already been replied. It may be noted that the information sought earlier was for the duration 2012-13, 2013-14 and 2014-15. The question now asked by EU also requires information during the year 2012 to now for which the reply has already been provided.
Guatemala

Question 1: In paragraph 2.30 states that, in order to simplify and speed up procedures for registration and licensing of foreign investors, an electronic window has been created in which the required formalities will be met. Is a mechanism to monitor the results generated from this new system contemplated?
Reply: Out of the 26 Central Services identified for integration with eBiz, 14 services have already gone live. Other 12 services are expected to be integrated in this financial year.

eBiz project is expected to lead to savings in time, cost and efforts for the entrepreneurs. Concerned authorities are attempting a common application form and process for incorporation of a company, allotment of Permanent Account Number (PAN) & Tax Deduction Account Number (TAN) and employer registration with Employees' State Insurance Corporation (ESIC) and Employees' Provident Fund Organization (EPFO).

This portal also provides facility to track specific application and to monitor the performance of various government agencies.

Question 2: Paragraph 3.4 states that India has implemented a risk management system (RMS) in customs, for trade facilitation. Please provide details about the implementation process and internal reforms in this regard?

Reply: The exponential growth in trade volumes means that the traditional approach of scrutinizing every document and examining every consignment will simply not work, as it would neither be desirable nor possible to constantly increase the resources with the increasing workload. Also, there is a need to reduce the dwell-time of cargo at the ports and airports and to reduce the transaction costs in order to enhance the competitiveness of Indian businesses, by expediting release of cargo where compliance is high. This necessitates that the department should be selective in its approach to deployment of its resources. The advances in Information Technology offer an opportunity to address these challenges faced by the department by putting in place an effective risk management system. The primary objective of the Risk Management System, therefore, is to strike an optimal balance between facilitation and enforcement and to promote a culture of compliance. It is intended to improve the management of the resources of the department to enhance the efficiency and effectiveness in meeting stakeholder expectations and to bring the Customs processes at par with the best international practices. The Risk Management System (RMS) has been adopted for both imports and exports.

Question 3: Paragraph 3.18 states that the effective rate of customs duties may be modified during the year. To have the latest information, Is there a website for importers/exporters to keep them aware of these changes and any other changes in additional charges affecting imports?

Reply: Information regarding charges, taxes, levies and fees to be paid by importers/exporters are be accessed at http://cbec.gov.in. The current rate of Customs duty for each tariff line is available at the ICEGATE "Customs Duty Calculator" [https://www.icegate.gov.in/Webappl]

Question 4: In paragraph 4.105, it is indicated that rural tele density has increased, but there remains a significant difference between rural and urban areas. What strategy has planned to reduce this gap?

Reply: National Telecom Policy 2012 has an objective of increase in rural tele-density to 70 by the year 2017 and 100 by the year 2020. Department of Telecommunications has drawn up an investment plan to provide mobile connectivity to uncovered villages in a phased manner over the next five years. With a view to attract investment in telecom services, FDI has already been raised to 100%. The method of increasing rural penetration includes the Universal Services Obligation Fund to provide capital and operational subsidy for investment in rural and remote areas.
Hong Kong, China

Questions on the Secretariat Report
A. Trade Policies and Practices by Measure

Special Economic Zones (SEZs) (Page 68-69, para 3.135-3.139)
1. SEZs may be established by the central or state governments or by private developers (including foreigners) as joint ventures with the State or fully private.

Question: Could India advise if there are any differences in requirements and restrictions between foreigners and local private developers in establishing SEZs, either as joint ventures with the State or as private developers? What is the proportion of foreign to local investments in establishing SEZs?
Rely: Provisions of SEZ Act/Rules are equally applicable to local as well as foreign investors with no differentiation between them.
Export-oriented units (EOUs)

(Page 70-71, para 3.140-3.145; Page 11, para 3.2)
2. The EOU scheme complements the SEZ scheme. The main objectives of the EOU scheme are to increase exports and foreign exchange revenues, promote the transfer of latest technologies, stimulate foreign direct investment, and generate additional employment. EOUs are similar to SEZs but may be located anywhere in the country.
Question: Are there any differences in requirements between foreign and local investment in setting up EOUs? What is the proportion of foreign to local investments in EOUs according to latest figures? Are there any special incentives to attract foreign investment to participate in the EOU scheme?
Reply: No, The proportion of foreign investments to the total investments in EOUs for 2012-13 is 39.46% and for 2013-14 is 27.81%., 100% FDI is permitted through automatic route.
Micro-and small enterprises (MSEs)

(Page 76, para 3.169; Page 160, Table A3.7)
3. At the State level, the schemes implemented to support the development of MSEs include: the development of industrial estate, tax incentives, and subsidies for electricity and capital.
Question: Given Hong Kong, China also has large number of small enterprises, could India share with us its plan regarding the development of industrial estate, how it operates and in what way MSEs can benefit from the industrial estate?
Reply: Under Micro and Small Enterprises – Cluster Development Programme (MSE-CDP), financial grants is provided for development of land, provision of water supply, drainage, Power distribution, non-conventional sources of Energy for common captive use, construction of roads, common facilities such as First Aid Centre, Canteen and other need based infrastructural facilities to MSEs in the new/existing industrial estates/areas.
The Patent System

(Page 93, para 3.247)
4. We noted that India's copyright law provides for fair use clauses.
Question: Does India provide fair use exceptions for parody, satire, caricature, pastiche and user-generated content in its copyright law? If yes, what are the details? Is there any copyright exception for education purposes? If yes, what are the details?
Reply: Yes, India does provide fair use exceptions under Section 52 of the Indian Copyright Act, 1957 as amended in 2012. Copyright exceptions are also provided, inter alia, for education purposes such as for collection of works consisting of non-copyrighted matters along with copyrights works, for instruction purpose, for purposes of research and exceptions for performances in educational institutions.
Question: Could India further explain the operation of its "notice-and-take-down" procedures? What other measures has India put in place to combat online infringing activities? Has India assessed the effectiveness of its measures in combating online infringing activities?
Reply: On a written complaint from the owner of copyright in the work complaining that such transient or incidental coverage is an infringement written complaint from owner of copyright in the work complaining that such transient or incidental storage is an infringement, such person responsible for the storage shall refrain from facilitating such asses for a period of 21 days or till he receives an order from the competent court refraining from facilitating asses. The procedure for take down notice and this written complaint has been given in Rule 75 of the Copyright Rules 2013.
Other measures put in place to combat online infringing activities include legal remedies for circumvention of effective technological measures and penalties for online infringement.