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

1.1 Recent economic developments. 1.3 (P.14)

Question 4: What do you mean by "strict labor regulations" in the context of sustained growth?

Reply: The term "strict labor regulations" has been used by the Secretariat in its report. We have no comments on the same.

Investment Regime 2.4. 2.4.1 (P. 31)

Question 5: Mexico wants to know what services sectors is required to establish as a wholly owned subsidiary and if the approval of the Reserve Bank of India is subject to this legal form for foreign investment, as some service sectors require authorization Board of Foreign Investment Promotion (no automatic approval route for establishing FDI) e.g. Broadcasting, print media and telecommunications (allowed to invest over 49% is required); Public and private banking (over 49%) and non-scheduled air services transport (over 49%).

Reply: The Question pertains to investment in Services Sector. The Services Sectors are covered from Para 6.2.7 to 6.2.17 of the Consolidated FDI Policy, 2015. Further, Financial Services are separately mentioned in Para 6.2.18 of the extant FDI Policy 2015. Some of the sectors covered under the said Paras of the FDI Policy are under Automatic Route, some are under Government Approval Route and some are on both Automatic/Government Approval Route, the details of which are provided in Chapter 6 of the extant Consolidated FDI Policy for each sector. The Consolidated FDI Policy, 2015, is available on the official website of the Department of Industrial Policy and Promotion i.e., http://www.dipp.nic.in.

Investment Regime 2.4. Section 2.32 (P.32)

It is explained that there are two industries reserved for the public sector atomic energy and rail operations with some exceptions, indicating that investors in all other industries do not require government approval, but must submit a memorandum of employer industry to Secretary of DIPP industrial permits for an industrial license.

Question 6: Mexico asks whether the memorandum is required for both domestic and foreign investors and if the grant of industrial license is subject to the amount of investment, the type of industrial activity or any other requirement related to the origin of the investment. It also requested India to discuss what is required to renew or extend the applicable license after expiry of the initial term of three years are.

Reply: The consolidated FDI policy circular of 2015 issued on 12-5-2015 provide the details of Foreign investment of the Government.

Presently, an Industrial License (IL) is required only for following five industries mainly on account of security, strategic and environmental concerns

i.Electronic Aerospace and Defence equipment: all types

ii.Industrial explosives including detonating fuses, safety fuses, gun powder nitrocellulose and matches

iii.Distillation and brewing of alcoholic drinks.

iv.Cigars and cigarettes of tobacco and manufactured tobacco substitutes

v.Specified Hazardous chemicals i.e. (a) Hydrocyanic acid and its derivatives, (b) Phosgene and its derivatives and(c) Isocyanates and diisocyanates of hydrocarbon, not elsewhere specified (example Methyl isocyanate).

For manufacture of any other items other than the above, investors may file an Industrial Entrepreneur Memorandum (IEM) with Secretariat for Industrial Assistance (SIA) in this Department on-line at e- biz portal: http://www.ebiz.gov.in.

The industrial license is required for above five industries for both domestic as well as foreign investors irrespective of amount of investment.

For renewal or extension of IL the procedure has been explained in DIPP Press Notes No. 5 and 9 of 2014 series. Industrial Licenses have initial validity of three years, further extendable up to seven years. However, for defence sector the initial validity of Industrial Licence has been increased from present three years to seven years with a provision to seek an extension of three years. DIPP Press Note 5 of 2015 series refers. In case, the licensee starts the commercial production within the validity period, the license continues to be valid.

Investment Regime 2.4. Paragraph 2.34 (P.33)

Question 7: Mexico requested information on the type of investment incentives that provide most of their States and whether these incentives are also granted to foreign companies wishing to establish industrial units out of the 29 sectors listed.

Reply: Consolidated information in this regard is not available.

Foreign investment 2.4.2, Point 2.38 (P.33)

Question 8: The paragraph explains that there are two main routes for FDI in India: the automatic route and not automatic. Regarding the second, Mexico requested to know the type of information to be provided by foreign investors in addition to apply to the Board for the Promotion of Foreign Investment. We also want to know the criteria for activities that require prior government approval for foreign investment above 49% (investments not exceeding 12,000 crore). In particular, the approval criteria for broadcasting services, written media and telecommunications; public and private banks, and non-scheduled services of air transport is required.

Reply: The extant Consolidated FDI Policy, 2015, is available on the official website of this Department i.e., www.dipp.nic.in . FDI in activities not covered under the automatic route requires prior Government approval and are considered by the FIPB. Further, each such sector services are subject to relevant conditionalities as detailed in the FDI Policy under the respective Paras. All such conditionalities are examined at the time of receipt of an application/proposal. The proposals involving investments exceeding Rs 3,000 crore under government approval route are considered by Cabinet Committee on Economic Affairs (CCEA).

Foreign investment 2.4.2. Point 2.39 (P.34)

Question 9: Mexico wants to know the criteria the Cabinet Committee on Economic Affairs (CCEA) uses to approve FDI of over 12,000 crore. And cases in which such approval may be denied.

Reply: The Cabinet Committee on Economic Affairs (CCEA) examines the FIPB proposals based on FDI policy with total foreign equity inflow of more than Rs. 3,000 crore in consultation with the various Administrative Ministries/Departments.

3.1.11.1 Antidumping and countervailing measures. (P. 57)

Question 10: Could India explain in detail what the procedure continues to meet regularly with the obligation under Article 5.5 of the AAD to notify the government of the exporting Member regarding its decision to initiate an anti-dumping investigation?

Reply: Under Rule 5(5) of the Anti-dumping Rules, the Designated Authority notifies the governments of the exporting countries through their embassies/representatives in India regarding receipt of anti-dumping application from the domestic industry before proceeding to initiate an anti-dumping investigation.

3.1.11.1 antidumping and countervailing measures. Point 3.59 (P. 57)

Question 11: Concerning the amendments to the "Customs Notification (non-tariff) No. 86/2011)" listed in paragraph ii) of paragraph 3.59 of WT / TPR / S / 313 "(ii) Changes to the definition of domestic industry to bring in flexibility", as amended on 1 December 2011. Could India provide further details on the said modifications and how to give greater flexibility? This under which they have not been notified to the respective WTO committees.

Reply: The amendment provides flexibility to the Designated Authority to decide whether to include or exclude a domestic producer as domestic industry, keeping in view the factual matrix of the case.

3.1.11.1 antidumping and countervailing measures. Point 3.59 (P. 57)

Question 12: How common is the use of avoidance procedures under the new rules and, if so, what is the alleged circumvention of the standard 25 most requested argued in the proceedings?

Reply: The question is not clear. However, the relevant rules concerning circumvention of anti-dumping duties were notified vide Notification No. 6/2012-Customs (N.T) dated 19th January, 2012 by introducing Rule 25 to 28 in the Anti-dumping Rules. However, India has not initiated any anti-circumvention investigation during the present review period.

3.1.11.1 antidumping and countervailing measures. Point 3.70 (P. 61)

Question 13: How often is the application of price undertakings accepted, and what were the reasons why India has decided not to accept these price undertakings requests?

Reply: India does not accept price undertaking offers considering them as impractical to monitor.

3.1.11.1 anti-dumping and countervailing measures. Point 3.71 (P. 62)

Question 14: Are there considerations, at least similar in practice, to those set out in paragraph 3.71 for goods that could possibly be subject to countervailing duties?

Reply: Countervailing duty is not payable on products imported by units in special economic zones (SEZs) or export-oriented units (EOUs), or on products imported under the Advance Authorization Scheme. The final countervailing duty paid on imported goods used in the manufacture of export goods may be refunded as brand rate of duty drawback in accordance with the drawback rules. Till date, countervailing duty has not been imposed on any product.

3.1.12.1. Standards. Point 3.87 (P.64)

Question 15: Is the Bureau of Indian Standards (BIS) a government organizations or an NGO? How the BIS is formed?

Reply: The Bureau of Indian Standards is a Body Corporate that came into existence through an Act of Parliament.

3.1.12.1. Standards. Point 3.90 (P.65)

Question 16: Who can make comments on the draft standard approved by the technical committee?

Reply: When a Technical Committee approves the draft, it is circulated to Stakeholders for comments as well as posted on the BIS website for public comments.

3.1.12.2 Technical Regulations. Point 3.92 (P.65)

Question 17: Regarding the deadline for comment Are there situations in which the term can be extended to 90 days?

Reply: Technical Regulation at draft stage is notified at WTO Secretariat giving 60 days' time for comments from the date of notification as per the provision of TBT Agreement.

3.1.12.3 certification and conformity assessment. Point 3.96 (p. 66)

Question 18: What is the special scheme for granting the license of "environment- friendly"? What products are granted such license?

Reply: Special Scheme refers to the Scheme for Certification of environment friendly products known as ECO Mark. The details of the scheme and the products covered are given in the BIS website http://www.bis.org.in/cert/prod_cert_scheme.asp.

3.1.12.4 Accreditation. Point 3100 (P. 67)

Question 19: Is the National Accreditation Board for Testing and Calibration Laboratories (NABL) a government organizations or an NGO? Is the NABL only accreditation body in India?

Reply: NABL is an autonomous body under the Department of Science and Technology, Government of India. NABL is the National Accreditation Board for Testing and Calibration Laboratories. However for accreditation of certification bodies and inspection bodies another designated body named ‘National Accreditation Board for Certification Bodies (NABCB) is functional under the Quality Council of India (QCI), Department of Industrial Policy and Promotion (DIPP), Government of India. Both these accreditation bodies are MRA/MLA signatories of ILAC/IAF for their respective programs.

Labelling 3.1.12.5. 3.103 (P.68)

Question 20: Please inform if the country has had any problems or have experienced problems against the food packaging regulations? If the answer is yes, please provided details about the country and the problem faced from it.

Reply: No

4.4.2 Telecommunications 4.102 (P.138)

The paragraph states that Telecom Dispute Settlement and Appellate Tribunal (TDSAT) resolves the differences between the government and licensees, between service providers and between them and consumers; also deals with the appeals against the decisions of the Telecommunication Regulatory Authority of India.

Question 21: Mexico wishes to know whether the Tribunal also settles disputes between telecommunications regulators and the private sector with foreign participation under the same conditions with regard to Indian nationals.

Reply: The jurisdiction of TDSAT extends to inter-alia disputes between licensed service providers and the regulator.

Telecommunications 4.4.2. 4.109 (P.140)

The paragraph states that funds Universal Service Obligation Fund (USOF) are allocated to "eligible operators" in the public and private sectors for the implementation of development projects of the telecommunications infrastructure and broadband in rural areas (for example, the provision of rural public telephones, home telephones and infrastructure for mobile and broadband services).

Question 22: We ask India to explain the definition of "eligible operators" in this context.

Reply: "Eligible operators" means the entities having valid license or registration or authorization from Central Government/Department of Telecommunications for providing telecom services or infrastructure or any other entities as may be specified in this regard by the Central Government from time to time.

4.4.4 Professional Services (P.147)

Question 23: Mexico is interested to know more details about the memorandums of understanding or agreements on mutual recognition of foreign qualifications that India has with other countries, particularly in North and Latin America.

Reply: With countries in North and Latin America, in the field of accounting profession, India has signed a Memorandum of Understanding with the Canadian Institute of Chartered Accountants (CICA) of Canada and a Technical Cooperation Agreement with the Information Systems Audit and Control Association (ISACA) of USA. The ICAI has also signed MOU/Technical Cooperation Agreements with relevant bodies in various countries like Ireland, UK, New Zealand, Australia, UAE, Oman, Saudi Arabia, Bhutan, etc.

4.4.5 Tourism. 4.151 point (p. 148)

Question 24: Mexico wants to know more details about how cooperation between UNEP, UN World Tourism Organization and the Government of India results in generation of quality standards?

Reply: Certain organizations such as the UNEP and the UN World Tourism Organization have developed the "Global Sustainable Tourism Criteria" (GSTC) for adoption by hotels and tour operators, drawn from criteria generated by a variety of sources.

Against this background, it was considered necessary to define criteria for sustainable tourism to suit Indian conditions, while also considering criteria generated by other sources, including the GSTC. In consultation with stakeholders, the Ministry of Tourism has developed the Sustainable Tourism Criteria for India (STCI) keeping in view issues such as the anthropogenic character applying to all major human impacts on the environment; ­local community participation, engagement and ­benefit; guidelines set by the ­Ministry of Environment & Forests, Government of India; water harvesting; lessons from successes and failures, both national & international; etc.

More details on the Sustainable Tourism Criteria for India (STCI) and indicators may be accessed from the website of the Ministry of Tourism.

New Zealand

1. AGRICULTURAL TARIFFS

Report by the Secretariat (WT/TPR/S/313): p. 40, para 3.22
New Zealand notes the Secretariat Report concludes India's "simple average applied MFN tariff in 2014-15 is 13%, up from 12% at the time of the last Review (2010-11)", which is mainly due to a rise in the average tariff on agricultural products (36.4%), which are already "considerably higher" than for non-agricultural products (9.5%). The Report by the Secretariat (p. 100, para 4.4) also notes that "variability, as well as the complex process for the notification of tariff-rate changes, can create uncertainty and act as an impediment to trade".
Question 1: What plans does India have to introduce greater stability for applied tariffs on agricultural products, and in the longer-term align them more closely to non-agricultural products?
Reply: The effective tariff rate of agricultural products is fixed in response to the price volatility in the domestic market and as a measure of balancing the interests of consumers and domestic farmers.
2. TARIFF RATE QUOTA

Report by the Secretariat (WT/TPR/S/313): p. 44, para 3.33
India is the world's largest producer of milk with domestic demand continuing to increase at a significant rate. New Zealand understands that domestic supply is struggling to meet the demand. However, page 44, paragraph 3.33 of the Secretariat Report says "India scheduled tariff rate quotas (TRQs) on five lines at the HS six-digit level", including skimmed milk powder and whole milk powder.
Question 2: Could India please explain the rationale 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.
3. Government procurement

Report by the Secretariat (WT/TPR/S/313): p.81, para 3.191
New Zealand welcomes India's utilisation of e-procurement, and moves to formulate "a comprehensive government procurement legislation that is applicable to all parts of the central Government".
Questions 3: What is the expected timeframe for this legislation to come into force? Does India intend to adopt a single portal for central government agencies to publish tender enquiries, in order to make these more accessible to potential tenderers?  If so, what is the expected date for this?
Reply: Central legislation is yet to be considered by the parliament therefore a specific time cannot be indicated. As far as portal is concerned, India already has a single portal www.eprocure.gov.in for Central Government agencies to publish their tender enquiries. As per the current instructions, all the Central Government Departments/Ministries and their attached subordinate offices/PSUs etc. have to necessarily publish all their tender notices on Central Procurement Portal (CPP) www.eprocure.gov.in developed by NIC. The CPP has given an opportunity to the vendors to see all proposed procurement of the Central Government at one place. Apart from above, electronic procurement has enhanced transparency and trust in the procurement system.
4. SANITARY AND PHYTOSANITARY MEASURES

Report by the Secretariat (WT/TPR/S/313): p. 62, para 3.106
New Zealand notes India’s efforts "to increase transparency of the scientific basis upon which India's SPS measures are adopted", including ensuring SPS measures which might affect the trading interests of other parties are notified to the WTO SPS Committee. 
Questions 4: What further steps does India have planned to ensure SPS notification requirements continue to be met?
Can India provide information on how it has considered concerns raised by members in the SPS Committee regarding import restrictions for products including apples, pears and citrus; import conditions for pork and pork products; and import requirements for blueberries and avocados?
Reply: All the rules and regulations made under the Food Safety and Standards Act, 2006 are being notified to the WTO-SPS as soon as it is draft notified in the Indian Gazette.
Normally 60 days' time is provided for comments. Comments received are considered before finalising the regulation.
5. GOODS AND SERVICES TAX (GST)

Indian Government Report (WT/TPR/G/313: pg 12, para 3.6
Page 12, paragraph 3.6 of the Indian Government report notes that:
"A major game changing reform in the near future would be the introduction of the Goods and Services Tax (GST) effective from 1 April 2016. The implementation of the GST would lead to the elimination of other taxes such as Central Excise duty, Service tax, State Value-Added tax, octroi, Central Sales Tax, State-level sales tax, entry tax, stamp duty, turnover tax, tax on consumption or sale of electricity and taxes on transportation of goods and services, thus removing the multiple layers of taxation that currently exist in India."
Questions 5: Will these other taxes and duties be eliminated at date of introduction of the GST (1 April 2016)? What taxes, duties and cess will continue to be applied to imports, and which of these are specific to different States and ports of entry?
Reply: information about elimination of taxes is given in the para itself. Normally, since the local taxes such as VAT, CST, etc. and the central excise duty are proposed to be subsumed in the GST, Additional duty of Customs (known as CVD) and SAD will also be subsumed into GST and a unified IGST rate will be applicable on imports.
6. TRADE POLICY CHANGES

Report by the Indian Government (WT/TPR/G/313): pg 15 para 4.14
New Zealand shares India's concern at page 15, paragraph 4.14 of the Government Report about "the rising incidence of non-tariff barriers, in the form of sanitary and phytosanitary (SPS) and technical barriers to trade (TBT)"
However, New Zealand notes that the Food Safety and Standards Authority of India (FSSAI) has extended on a number of occasions the implementation dates for a number of regulations. In particular, we refer to F.No. 4/15015/30/2011 (dated 7 June 2013) introducing labelling requirements for the packaging of imported items. The implementation date for this regulation has been extended twice and most recently, in notification F.No. 4/15015/30/2011 (dated 16 December 2014), it was extended to 1 July 2015. New Zealand understands that the Indian Government is undertaking a review of FSSAI regulations following concerns raised by importers directly and by WTO Members in the TBT Committee.
Question 6: Will the date for implementation of this regulation be further extended pending a full review addressing concerns?
Reply: It will not be extended further. However, this requirement has been allowed to be met by affixing a sticker in the customs bonded area in respect of imports.

7. SERVICES TRADE

Report by the Indian Government (WT/TPR/G/313): p. 9 para 2.26
New Zealand welcomes India's objective of engaging with "business and governments from across the world to promote greater trade in services between India and the rest of the world" and increasing "FDI flow in the services sector".
The Report by the Secretariat (WT/TPR/S/313, p. 29, para 2.23) notes India's FTA practise is GATS-based, as well as India's statement that in its most recent agreement with ASEAN its services commitments are "well within the existing autonomous regime". The report concludes that while India's FTA commitments on services go beyond its GATS commitments, India's applied regime remains more liberal.