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

Part II. Questions based on Policy Statement by India (WT/TPR/G/313)
2 ECONOMIC ENVIRONMENT

Page 9, para. 2.25
A new initiative to boost the export of services is the annual Services Conclave held twice so far. This is intended to bring all stakeholders on a single platform, identify issues and prepare a road map for the promotion of services exports.
Question 29: Please provide more information about the Services Conclave.
Reply: With a view to providing an interactive platform, the Services Conclave was organized for the first time in 2013. The primary aim of the Conclave is to address issues and bottlenecks affecting international trade, including the need for necessary domestic regulatory reforms in various service sectors and to develop a roadmap for augmenting international trade in consultation with concerned stakeholders. The conclave seeks to bring together all stakeholders, such as domain experts, academicians, industry practitioners as well as government representatives, under one umbrella for maximizing benefit to industry, business and economy.

Two editions of services conclaves have been held so far. These were organized during November 2013 and November 2014 respectively. The next edition of the Conclave is likely to be held on the sidelines of the Global Exhibition on Services scheduled during February 24-26, 2016.

There is no specific website for the Conclave but the information about the conclave can be accessed on the website of the Department of Commerce, Ministry of Commerce and Industry, Government of India at www.commerce.nic.in.
3 THE NEW REFORM AGENDA
Question 30: The Indian government is relaxing restrictions on and fields for FDI. Has the Indian government adopted relevant security review measures for foreign the investment in national defence and other sensitive industries?
Reply: Yes
Page 13, Para 36
Question 31: Please explain the policy considerations behind the "Labour-sector reforms" and its implementation effect, particularly regarding hiring and sacking employees by foreign-invested enterprises.
Reply: In present economic scenario, in the reference of global competitiveness, liberalization of trade and industry, changes in the technology and methodology of the production their impact on the employment and the need of continuous upgrading of the skills for enhancing the employability & mobility, there is an utmost requirement of revisiting and restructuring of the labour jurisprudence of the country.
In the light of this background, following Policy considerations are identified for the labour reform:

The emerging economic environment involving rapid technological changes, requiring response in terms of change in methods, timings and conditions of work in industry, trade and services, globalisation of economy, liberalisation of trade and industry and emphasis on international competitiveness and the need for bringing the existing laws in tune with the future labour market needs and demands;

The minimum level of labour protection and welfare measures and basis institutional framework for insuring the same, in the manner which is conducive to a flexible labour market and adjustments necessary for furthering technological change and economic growth; and
Improving the effectiveness of measure relating to social security, occupational health and safety minimum wages and linkages of wages with productivity.
The Labour Laws in India do not make any distinction between Indian Enterprises and of Foreign-Invested Enterprises. The provisions of Industrial Disputes Act, 1947 are to be complied before sacking the employees.
4 TRADE POLICY

4.1 Foreign Trade Policy
Question 32: Please describe the main differences between the latest Foreign Trade Policy and the current one?
Reply: Current Foreign Trade Policy (FTP) 2015-20 has been released and made effective from 1.4.2015. Main differences between the current FTP 2015-20 and the last FTP 2009-14. is that the FTP 2015-20 has discontinued six export facilitation schemes and introduced the scheme "Merchandise Export from India Scheme (MEIS)". The discontinued schemes are:
Focus Product Scheme (FPS)

Focus Market Scheme (FMS)

Market Linked Focus Product Scrip (MLFPS)

Vishesh Krishi and Gram Udyog Yojna (VKGUY)

Agriculture Incentive Scrip

Incremental Export incentive Scheme.

Details of the scheme and highlights of new initiatives are available at http://www.dgft.gov.in.
Question 33: What are India's short-term and long-term foreign trade objectives? Has India conducted any assessment on how well the two objectives set in the latest FTP were achieved? Are there any useful experiences to draw from the implementation and amendments of the 2009-2014 FTP in order to attain the 2015-2020 FTP objectives?
Reply: The Foreign Trade Policy for 2015-20 seeks to achieve the following objectives:

• 
  To provide a stable and sustainable policy environment for foreign trade
  
• 
  To link rules, procedures and incentives for exports and imports with other initiatives such as "Make in India", "Digital India" and "Skills India"
  
• 
  To promote the diversification of India's export basket
  
• 
  To create an architecture for India's global trade engagement with a view to expanding its markets and better integrating with major regions
  
• 
  To provide a mechanism for regular appraisal in order to rationalize imports and reduce the trade imbalance.
  

Formulation of Foreign Trade Policy is the result of continuous interaction and consultation with stakeholders and internal assessment of economic situation.
It would be evident from the facts that over last few years, India's merchandise trade increased manifold from US$ 488.99 billion in 2008-09 to US$ 764.6 billion in 2013-14.. Its ranking in terms of leading exporters and importers improved significantly. While India's total merchandise trade as a proportion of gross domestic product (GDP) increased to 41.8 per cent in 2013-14, India's merchandise exports as a proportion of GDP increased to 17.0 per cent during the same two time periods. The export performance was achieved despite the global uncertainty and volatility in global commodity prices since last few years.
Question 34: Is there any export subsidy recently implemented under the new Foreign Trade Policy which affected the textile industry? If yes, please provide detailed information.
Reply: In the new Foreign Trade Policy announced on 1 April, 2015, a number of schemes appearing in Chapter 3 has been removed, replacing it with a single scheme "MEIS" for the manufacturing sector including the textile industry. The details of the scheme are available in the public domain and can be seen at http://www.dgft.gov.in.
Part III. Other Questions
Question 35: Are there any new facilitation policies in the Employment Visa and Project Visa for foreign workers?
Reply: The details of the polices with respect to all types of visa for foreigners are available at the following link: http://mha1.nic.in/foreigDiv/OverviewVisa.html
Question 36: Why are the investors from 7 countries required to get the pre-approval from the Indian Reserve Bank when purchasing land in India? Is this requirement consistent with MFN treatment in WTO? Are there any policy changes in this regard?
Reply: In terms of Regulation 7 of Notification No. FEMA 21/2000-RB dated May 3, 2000 as amended from time to time, citizens from certain countries, without prior permission of the Central Bank of India, are not permitted to acquire or transfer immovable property in India, other than lease, not exceeding five years, for reasons contained therein.
Question 37: Does India have any plans to raise the import duties of power equipment?
Reply: Import duties on various products are a sovereign policy matter and the same is determined keeping in view various domestic factors, multilateral commitments etc.
Question 38: What's the definition of infrastructure service provider and how is it different from internet service provider? Why does India maintain foreign ownership restrictions on the internet service providers without gateways? Does India plan to reflect in its services schedule the in existing elements in its domestic law?
Reply: The Infrastructure Provider is given registration by the Department of Telecommunications, Government of India to establish and maintain the assets such as Dark Fibres, Right of Way, Duct Space and Tower for the purpose to grant on lease/rent/sale basis to the licensees of Telecom Services licensed under Section 4 of Indian Telegraph Act, 1885 on mutually agreed terms and conditions. In no case the Infrastructure Provider company shall work and operate or provide telegraph service including end to end bandwidth as defined in Indian Telegraph Act, 1885 either to any service provider or any other customer.
For providing Internet services, ISP Authorization under Unified Licence is required and the licensee is permitted to provide the services, as defined in Chapter IX on "Internet Services" of Unified license http://www.dot.gov.in/sites/default/files/Amended%20UL%20Agreement_0.pdf)

It is clarified that 100% Foreign Direct Investment (automatic up to 49% and government route beyond 49%) is permitted for all the Telecom services including Internet Service Providers subject to observance of license conditions by investors and licensees.

With regard to scheduling of services, decision will be taken in consultation with all stakeholders as per Policy.
Question 39: On September 2013, an amendment to the Special Economic Zones was implemented, which was aimed at reducing the minimum land area requirement for setting up SEZ's in various sectors. Please provide information about the development of IT SEZs in different States concerned after the waivering of 10 Ha minimum land requirement.
Reply: There is no minimum land area requirement for IT/ITES SEZs. The earlier minimum land requirement of 10 Hectares for IT/ITES SEZs has been waived vide notification dated 12^th August, 2013. There is however a built up area requirement of 1 Million sq. ft. for setting up of such SEZs.
Question 40: In the new amendment of the Special Economic Zones which was implemented on January 2015, Article 3 states that "The Department of Commerce has provided the following norms with respect to areas to be earmarked for residential, commercial and other social facilities…? Has the Department of Commerce or Board of Approval established any specific conditions for areas to be earmarked for residential, commercial...? If so, please provide relevant information.
Reply: No specific conditions have been laid by Department of Commerce/Board of Approval for areas to be earmarked for residential, commercial or other social facilities other than the conditions as specified under Notification GSR 5(E) dated 2^nd January, 2015.
Comment 41: According to India's 1995 Act of Foreign Institutional Investors, a foreign institution belonging to "a common owner" or "a common beneficiary" is regarded as a single institution, on which a combined regulation is exercised, to prevent any single-source institution from substantially controlling a listed Indian company. We are very concerned with the judicial interpretation of "a common owner" and "a common beneficiary". For example, according to the present explanations by India, a foreign institution which is a state-owned or –sponsored investor but operates as a company and practices independent accounting is regarded as a "common owner" or "common beneficiary". We suggest that India amend the relevant clauses.

China

Follow-up Questions

Part I. Questions based on Report by the Secretariat (WT/TPR/S/313)
Page 32, Para. 1.20
FDI inflows have been strong in services including financial, banking, insurance, business, outsourcing, R&D, courier, and technical services, and the automobile industry and telecommunications
Question 1: Has India opened up all types of its courier business to foreign investors? Are foreign investors required to obtain governmental licensing when investing in courier services in India? If yes, please introduce the types of licensing and their corresponding procedures. What is the market share of foreign investors in courier service in India? Which are the relatively large domestic courier companies in India?
Reply: FDI Policy pertaining to Courier Services is included in the Consolidated FDI Policy, 2015, available on the website of the Department of Industrial Policy and Promotion (www.dipp.nic.in).

The Government of India does not have data on the market share of foreign investors in courier service in India and regarding the large domestic courier companies in India.

Page 32, Para 2.33
"…incentives for the NIMZ will include assistance with water and environment audits, easing access to finance, rationalization and simplification of business regulations…"
Question 2: Please elaborate on the incentive policies for water and environment audits in the NIMZ.
Reply: Technology Acquisition and Development Fund has been created under NIMZ for creation of a patent pool; incentivization of production of environment friendly machines/ equipment and of SMEs for adoption of environmental audit, water audit and waste water treatment practices. The detailed policy in this regard including incentives can be accessed at http://dipp.nic.in/English/Policies/National_Manufacturing_Policy_25October2011.pdf.
Page 32, Para. 2.34
"In addition to compulsory industrial licensing and reservations for the public sector, environmental clearance under the Environment Protection Act, 1986, is required from the Ministry of Environment and Forests, for 29 industries prior to establishing industrial units."
Question 3: Please introduce the content, issuing procedures and regulations of environmental clearance.
Reply: These details are available at the following link: http://envfor.nic.in/legis/eia/so1533.pdf.
Page 56, Para. 3.71
Anti-dumping 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.
Question 4: Please briefly introduce the special economic zones, the export-oriented units and the Advance Authorization Scheme. Are there any exceptions to the above scenarios where anti-dumping duty is not to be paid?
Reply: Details of the Special Economic Zones (SEZs), can be seen at www.commerce.gov.in and that for Export Oriented Units (EOUs), and the Advanced Authorization Scheme can be seen at www.dgft.gov.in. As of now, the exception of payment of anti-dumping duty is limited to these Schemes only.
Page 57, Para. 3.72.
There has been no change in India's legislation regarding countervailing measures since its previous Review. Countervailing measures may be imposed under the Customs Tariff Act 1975 Part 9) and the Customs Tariff (Identification, Assessment and Collection of Countervailing Duty on Subsidized Articles and for Determination of Injury) Rules 1995. Investigations can be initiated only after an application is submitted before the authority, and in the event the authority finds prima facie evidence of subsidy, injury and a causal link between the subsidized imports and alleged injury to the domestic industry.
Question 5: We noticed that India initiated a countervailing investigation against Chinese wind generator set castings in 2014. The alleged multiple subsidy programs in the investigation application were simply assertion without any evidence of the existence of the subsidies, the amounts and nature of the subsidies, the injury and casual link between the subsidized imports and the alleged injury as required by the WTO Agreement on Subsidies and Countervailing Measures. Please explain the reasons.
Reply: The countervailing duty investigation was initiated based on the accuracy and adequacy of the evidence provided in the application filed by the domestic industry and where the evidence is sufficient. Prior to initiation as well as subsequently, opportunities have been provide to the parties for providing their comments along with the evidence. Final findings shall contain all the parameters required under the countervailing duty (CVD) investigation.
Page 60 , Para. 3.96
"…the BIS also grants licences to environment-friendly products under a special scheme and awards the ECO mark to such products."
Question 6: Please give details on the BIS's license-granting to environment-friendly products and the definition of "environment-friendly products". Does India give priorities or incentives to products with ECO mark in government procurement?
Reply: The specific criteria for products covered under eco-marking scheme are given at http://www.bis.org.in/cert/prod_cert_scheme.asp.
Page 78 Para. 3.175
Between May 2009 and December 2014, the CCI received 557 cases (excluding combination filings as described in the next paragraph). As at 31 December 2014, 283 cases (out of 557 cases) were closed at the prima facie stage, 144 cases decided/disposed of after the report of the Director General (DG) of Investigation, 55 cases under consideration before the CCI, and75 cases under investigation before the DG. …the total amount of the penalty amounting to Rs 124.7 billion.
Question 7: What are the major industries and sectors involved in the 557 cases received by CCI? What are the respective proportions of state-owned enterprises, multinationals and other different business entities involved in these cases?
Reply: Cases received in the Competition Commission of India cover various sectors of the economy and are received from both small enterprises and multinationals. The major industries and sectors involved in the cases are Real Estate (25.24%), Film-TV Entertainment (7.7%), Banking/Insurance/Stock Exchange (5.9%), Health & Pharmaceutical (5.08%), IT (3.9%) and Automobile (3.78%), Coal (2.6%), Petroleum/Gas (2.45%), Electricity (2.45%) and Civil Aviation (2.29%).
Competitive neutrality is one of the core principles of competition law in India and this principle is followed in letter and spirit. Accordingly, it is seen that a number of cases relating to state owned enterprises are filed with the Commission.

Page 87 Para 3.220.
The Indian patent office has issued patent examination guidelines to address a number of specific issues. However, while these guidelines provide guidance to patent examiners, they do not overrule the law, which would prevail in case of conflict between the guidelines and the Patents Act.
Question 8: What kinds of examination guidelines are issued by the Indian patent office in addition to those issued to address specific issues as mentioned in paragraphs 3.221-3.224? Do patent applicants have access to these guidelines?
Reply: No separate guidelines for examination of patent applications, other than those published by the Office in the website, have been published and provided by the office of Controller General of Patents, Designs and Trademarks. Patent applicants have free access to all these Guidelines. There is also no question of any conflict arising between the guidelines and the Patents Act as the guidelines are always prepared within the framework and scope of the Patents Act.
Page 96, Para3.261.
There is no specific legislation protecting test data submitted for obtaining regulatory approval of pharmaceuticals. The Drugs and Cosmetics Act of 1940 regulates the manufacture and marketing approvals for drugs and traditional medicines, while the Insecticides Act of 1968 addresses the manufacture and marketing approvals for agricultural chemicals (such as insecticides, fungicides and weedicides). However, there is no statute in place in India at this time for the protection of pharmaceutical, agrochemical and traditional medicine-related data against disclosure and reliance by third parties. Such test data is said to be protected under the Official Secrets Act. However, it is not clear how India implements the second obligation under Article 39.3 of the TRIPS Agreement, which is in addition to the obligation to provide protection against disclosure, namely, protection of such data against unfair commercial use.
Question 9: What is the policy of India towards opening its domestic market of traditional medicine and accepting traditional medicine products and services from other countries? Does India have a timetable for the opening process in this regard?
Reply: Traditional medicine system in India follows the well-established principles. The Ayurvedic Pharmacopia has already set standards and the products that meet those standards are accepted. The regulatory regime around these standards is also being developed to provide for a predictable and scientific regulatory regime.
Page 102, Table 4.2 Agriculture sector schemes/programmes, 2014
Question 10: Please illustrate the implementation of the agriculture sector schemes, for example, how the schemes are implemented and what their effects are.
Reply: Agriculture is a State subject. State Governments have their own State schemes. However, schemes are also planned by Government of India to give broad directions to achieve overall goals like food security etc.
The Department of Agriculture & Cooperation is implementing various missions/schemes which, inter alia, focus on productive infrastructure such as soil and water conservation, expansion and improvement of irrigation systems, market infrastructure, storage, farm credit and insurance. They include some of the following activities viz. establishment of cold storages; processing units; pack houses; pre-cooling units; controlled atmosphere storage; reefer vans; setting up of ripening chambers; strengthening facilities for production and distribution of quality seeds; supply of quality planting material through establishment of nurseries; creation of infrastructure for post harvest management; setting up of soil and fertilizer testing laboratories; setting up of bio and organic fertilizer units, etc. Further, Rashtriya Krishi Vikas Yojana (RKVY), which is a major scheme for incentivizing States to increase public investment in agriculture and allied sectors, has earmarked 35% of annual outlay under RKVY for infrastructure and assets.
The effect of implementation of schemes is evident in increase of productivity of major crops like rice, wheat, maize, pulses etc.

Page 105, Para4.29.
(AICI) implements the Government's National Agriculture Insurance Scheme (NAIS)
Question 11: Please introduce the Agriculture Insurance Company of India Ltd (AICI) and the Government's National Agriculture Insurance Scheme implemented by AICI, such as the varieties of crops covered by the insurance, the percentage of insurance premiums paid by the farmers, etc.
Reply:
National Agricultural Insurance Scheme
To enlarge the coverage in terms of farmers (loanee and non-loanee both), more crops and more risks, "National Agricultural Insurance Scheme (NAIS) was introduced in 1999-2000 in the country replacing the Comprehensive Crop Insurance Scheme (CCIS). The scheme is available to all the farmers - loanee and non-loanee both - irrespective of their size of holding. The NAIS has been implemented by 26 States and 2 Union Territories so far.
The Scheme covers all the food crops (cereals, millets and pulses), oilseeds and annual commercial/horticultural crops, in respect of which past yield data is available for adequate number of years. The administered premium rates are charged which range from 1.5% to 3.5% of sum insured for food and oilseed crops for normal sum insured and indemnity level. In the case of commercial/ horticultural crops, higher sum insured & indemnity than the normal, actuarial rates are charged. Under the scheme, 10% subsidy in premium is available to small & marginal farmers.
Agriculture Insurance Company of India Limited
Agriculture Insurance Company of India Limited (AIC) was formed under the Indian Companies Act 1956 in December, 2002. It took over the implementation of the "National Agricultural Insurance Scheme" (NAIS) from General Insurance Company of India (GIC) as AIC has been designated by the Government of India as the "Implementing Agency" of NAIS, the country-wide crop insurance program and insurance products relating to agriculture and rural and allied activities. AIC is under the administrative control of Ministry of Finance, Government of India, and under the operational supervision of Ministry of Agriculture, Government of India. The activities of the company are governed by the Insurance Act 1938, regulations framed by Insurance Regulatory and Development Authority (IRDA), India and Company Act 1956 and other relevant laws from time to time in force. More detailed information about AIC of India is available at http://www.aicofindia.com/AICEng/Pages/Default.aspx