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

Question 53: In addition to India's three national enquiry points, the United States has noted that the Food Safety and Standards Authority of India (FSSAI) is listed as the SPS enquiry point for India’s recently submitted WTO notifications. Is FSSAI the apex national enquiry point?
Reply: India has following three SPS enquiry points:
Food safety related issues-Food Safety and Standards Authority of India (FSSAI)
Animal health and related issues - Department of Animal Husbandry, Dairy & Fisheries
Plant health or phytosanitary issues: Director, Plant Protection, Dept. of Agriculture & Ministry of Agriculture
Question 54: In regard to SPS-related WTO Notifications, how does India review and evaluate diverging comments and viewpoints received from different stakeholders, including the private sector and WTO Members?
Reply: Comments of member countries are reviewed by the Technical Expert Committee.
Question 55: Once stakeholder comments are submitted on a draft notification, when should the submitting party expect a response?
Reply: Following stake holders comments on the draft notification the responses to the member countries will be communicated soon after reviewing the comments and issues raised therein.
Question 56: What are the parameters that India typically uses to conduct import risk analysis? How does India determine the prevalence of a disease or pest domestically to ensure consistency? Is India’s risk analysis framework aligned with the relevant WTO, OIE and NPPC standards for a scientific risk assessment?
Reply: Import Risk Analysis is carried out as per parameters laid in OIE risk analysis procedure. The animal disease situation of any country is ascertained based on the disease situation notified to OIE by the member countries. Since India’s sanitary requirement are based on OIE standards, therefore, the risk analysis frame work is aligned with OIE standards.
Question 57: Do India’s risk assessments cover a country or a region?
Reply: The risk assessments cover both country and the region.
Question 58: What is the typical time frame for a risk analysis?
Reply: It depends upon the product and sanitary situation of the exporting country. Generally, the risk analysis is completed within 45 days.
Question 59: Once the risk analysis is complete, how long does it generally take to issue an import license?
Reply: Sanitary Import Permit for animal products are issued within seven days after completion of risk analysis.
Question 60: Does a risk analysis have to be completed before an import license is issued?
Reply: Yes, Risk Analysis has to be completed before Sanitary Import Permit is issued.
Question 61: Does the Government of India plan to introduce measures to improve the efficiency of risk analysis and the process for issuing import licenses?
Reply: Yes
Question 62: Please explain in detail the meaning of the phrase in paragraph 3.109 that permits "may be used for multiple consignments." Would an importer require only a single permit to cover multiple shipments? Could the importer use the same import permit to cover multiple suppliers from the same exporting country?
Reply: The permit is valid for multiple consignments restricted up to the quantity and validity. One permit can be used for multiple consignments for single supplier till the exhaustion of the quantity or date of validity whichever is earlier. The producers may be more than one.
Question 63: Please clarify the process and contact point by which trading partners may submit proposals requesting India to recognize the equivalence of its trading partners’ SPS measures that are based on Codex Guidelines, as indicated in paragraph 3.116.
Reply: This can be taken up with the following Inquiry point:
Food Safety and Standards Authority of India (FSSAI)

FDA Bhawan, Kotla Road, New Delhi-110002, India

Tel: [phone]

Fax: [phone]

Website: http://www.fssai.gov.in
3.2 Measures Directly Affecting Exports

3.2.2. Export Taxes, Charges and Levies
Pages 65-66, paragraphs 3.122-3.123, Table 3.11 and Table 3.12: The Secretariat’s Report details a number of export taxes and export cesses in place in 2014, including measures on certain raw materials used in steelmaking: bauxite, iron ore, chrome, manganese, and ferrous scrap.
Question 64: Please explain the rationale for maintaining export restraints on these products. Also, please confirm that there are no export bans or quotas currently in place on these steelmaking raw material products at either the national or state level.

Reply: Export taxes on various minerals, as mentioned, have been maintained to ensure that the domestic end user industries have sufficient access to them. Excess mining has adverse consequences on the environment and lead to substantial addition of costs to the economy and the people. There is no bar on export of iron ore. However production of iron ore is done as per mining plan within statutory framework.
3.2.5 State Trading Enterprises
Page 67, paragraph 3.130: The Secretariat’s Report notes that state-trading export privileges exist for certain agriculture products (as noted in G/STR/N14/IND, dated 30 November 2012) with a view of preventing wide domestic price fluctuations.
In that regard, please explain the following:
Question 65: How do state trading export privileges prevent upswings and downswings in prices?
Reply: State Trading Enterprises do not function with an objective to prevent upswings and downswings in prices as they make purchases or sales involving imports or exports solely in accordance with commercial considerations.
Question 66: How does India ensure that state trading export privileges are compliant with WTO obligations, including the prohibition on export subsidies, when selling Indian commodities purchased in the domestic market at high prices on world markets?
Reply: STEs work purely on commercial considerations. Para 2.11 of FTP 2015-20 prescribes that STE(s) will make any purchases or sales involving imports or exports solely in accordance with commercial considerations, including price, quality, availability, marketability, transportation and other conditions of purchase or sale in a non-discriminatory manner and shall afford enterprises of other countries adequate opportunity, in accordance with customary business practices, to compete for participation in such purchases or sales. This and other practices makes STEs compliant with India’s WTO obligations.
The United States notes that the Secretariat Report does not reference wheat among the agricultural commodities for which state trading enterprises (STEs) have export privileges. The Project and Equipment Corporation of India (PEC), State Trading Corporation of India Limited (STC), and Minerals and Metals Trading Company (MMTC), all notified STEs by India, have all published tenders for the export of wheat. For example, between November 15, 2013 and January 23, 2014 approximately 2 million metric tons were tendered for export from government stocks. Please explain on what basis these STEs have export privileges for wheat. Moreover, based on data compiled from Indian government sources, the cost to port for wheat tendered from Indian government stocks was approximately $310 per metric ton, indicating below cost export sales by the Indian government.
Question 67: Recognizing that India cannot share the details on individual bids, please provide the average acquisition cost and incidental charges for wheat tendered during the November 15, 2013 to January 23, 2014 period. Also, please also provide average pooled cost of grains to FCI, handling charges, gunny costs, administrative charges, statutory taxes, and storage charges for a period of six months.
Reply: FCI pays acquisition cost of foodgrains to various procurement agencies based on the costs approved by the Government. Government approves varying costs for various States based on rates of taxes, labour charges, transportation etc. Acquisition cost sheets of wheat for various States for 2013-14 are available on the website of the Department.
3.2.6 Export Support and Promotion
Page 68, paragraph 3.132: The Secretariat’s Report notes that India provided export subsidies for sugar, tea, processed fruits and vegetables, fresh fruits and vegetables, plants and flowers, and animal products in 2009.
Question 68: Noting that India did not schedule the right to export subsidies, on what basis does India provide export subsidies after the Uruguay Round implementation period? Please provide figures for the level of export subsidies, by commodity, provided by India during the period under review in this report.
Reply: India takes its WTO commitments seriously and the provision of export subsidies is WTO compliant. Details of export subsidy schemes are available in the Foreign Trade Policy, which is in the public domain and can be seen at http://www.dgft.gov.in.
Page 68, paragraph 3.133: The Secretariat’s Report states that India’s latest notification to the WTO Committee on Subsidies and Countervailing Measures included fishery programmes at the state, union territories and central government levels. The United States notes that India previously notified that it maintained only three industrial subsidy programs, despite evidence to the contrary, as detailed throughout the Secretariat’s report.
Question 69: When will India submit its next new and full subsidy notification that includes all programs at the central and sub-central levels of government?
Reply: India has already submitted to the WTO, the latest notifications on fisheries subsidies, involving a number of State Governments and the Union Territories, fulfilling India’s commitments to that extent. India has also fulfilled its commitment of Notification on Preferential Tax programmes. This is an indication of our commitment and serious efforts towards meeting our obligations under Article 25.2 of ASCM. For the remaining other programmes, India is collecting the information from all the stakeholders concerned and is examining them both from the angle of facts to be provided and the need for notifying them to WTO at all under the requirements of Article 25.2 of ASCM.
3.2.6.1 Special Economic Zones (SEZs)
Pages 68-71, paragraphs 3.135-3.145: The Secretariat’s Report notes that firms, including those within the textiles and garment industries that are established within a Special Economic Zones (SEZ) and/or designated as an Export Oriented Unit (EOUs), benefit from various tax exemptions. Specifically, the Secretariat's Report notes that SEZ and EOU units are exempt from various taxes, such as income tax, central sales tax, and minimum alternate tax, as well as from a series of state taxes (i.e., sales taxes, stamp duty, central sales tax and electricity duty). The United States recalls that the previous Secretariat's Report noted that both SEZs and EOUs were exempt from various taxes, including income tax, until March 31, 2011.
Question 70: Please confirm whether some or all of these incentives have continued past that date. If they have continued, please provide the expected date of termination, if any.
Reply: Tax incentives as envisaged under the original SEZ Policy are available to various entities in SEZ. However the Minimum Alternate Tax (MAT) and Dividend Distribution Tax (DDT) was made applicable to SEZ entities vide the Finance Bill, 2011 w.e.f 01.04.2012.
The Secretariat’s Report does not mention export processing zones, which were originally established by the Industrial Development and Regulation Act of 1951, but does reference new national investment and manufacturing zones in paragraph 4.47.
Question 71: Does India still maintain export processing zones at this time or were they subsumed into other programs? Please explain the current status of the program and whether the original beneficiaries of the program continue to enjoy benefits in some manner.
Reply: Export Processing Zone scheme has been subsumed in Special Economic Zone scheme. The original beneficiaries of the program continue to enjoy benefits under the SEZ policy.
3.2.7 Export Finance, Insurance and Guarantees
Page 72, paragraph 3.152: The Secretariat’s Report states that "[e]xport credit is under the overall regulation and supervision of the RBI."
Question 72: Please describe the role of the government in the provision of export financing by commercial banks.
Reply: RBI first introduced the Export Financing program in 1967. The program was intended to make short-term working capital finance available to exporters at internationally comparable interest rates. Export Credit is available in rupee as well as in foreign currency.
Rupee Export Credit:
Under the earlier scheme in force up to June 30, 2010 RBI fixed only the ceiling rate of interest for export credit while banks were free to decide the rates of interest within the ceiling rates keeping in view the Benchmark Prime Lending Rate (BPLR) and spread guidelines and taking into account track record of the borrowers and the risk perception.
With effect from July 1, 2010 the Base Rate was introduced for enhancing transparency in lending rates of banks and enabling better assessment of transmission of monetary policy. Under the Base Rate System, interest rates applicable for all tenors of rupee export credit advances are at or above Base Rate.
Banks grant export credit to eligible exporters as per their well-defined loan policy approved by their Board of Directors which should lay down exposure limits to individual/group borrowers, documentation standards, margin, security, sectoral exposure limits, delegation of powers, maturity and pricing policies, factors taken into consideration for deciding interest rates, etc. Accordingly, interest rates on export credit is deregulated and is determined by banks as per their Board approved policy,
Export credit in rupees is available for a maximum period of 360 days.
Export credit in foreign currency:
In respect of export credit in foreign currency, banks have been allowed to finance to exporters at internationally competitive rates under the programs of 'Pre-shipment Credit in Foreign Currency' (PCFC) and 'Rediscounting of Export Bills Abroad' (EBR). Up to May 4, 2012 banks were allowed to decide the interest rate on export credit within the ceiling rate, linked to LIBOR as prescribed by RBI. However, with effect from May 5, 2012 banks are free to determine the interest rates on export credit in foreign currency. Accordingly, the interest rates are completely determined by banks themselves. Export credit in foreign currency is available for a maximum period of 360 days.
More specifically:
Question 73: Does India provide interest rate support to commercial banks so that these banks can provide financing at "internationally-competitive rates?"
Reply: Under rupee export credit interest subvention scheme, GoI used to provide subsidy to commercial banks at 3% which is to be passed on to the exporters upfront. The rupee export credit interest subvention was in vogue till March 31, 2014. However, Govt. of India has not extended the scheme beyond March 31, 2014.
Question 74: Does India provide any type of guarantee to the commercial banks to cover losses in case of defaults under export financing provided by the commercial banks?
Reply: In terms of Para 2.6 of RBI’s Master Circular DBOD No.DIR.BC.19/ 04.02.002/ 2014-15 dated July 1, 2014 on 'Rupee / Foreign Currency Export Credit and Customer Service To Exporters', the Whole Turnover Post-shipment Guarantee Scheme of the Export Credit Guarantee Corporation of India Ltd. (ECGC) provides protection to banks against non-payment of post shipment credit by exporters. Banks may, in the interest of export promotion, consider opting for the Whole Turnover Post-shipment Policy. Further, banks have also been advised that as the post-shipment guarantee is mainly intended to benefit the banks, the cost of premium in respect of the Whole Turnover Post-shipment Guarantee taken out by banks may be absorbed by the banks and not passed on to the exporters.
Question 75: Do state-owned banks provide export financing to support exports of agricultural products?
Reply: Yes.

Question 76: Does the Royal Bank of India determine the base rate applicable to interest rates for export credits? How is the base rate determined?
Reply: The Reserve Bank of India does not determine the base rate applicable to interest rates on rupee export credit. Banks are free to determine their own base rates. Banks are, however, not permitted to resort to any lending (including rupee export credit) below their base rates (base rate effectively working as the minimum lending rate for all rupee loans). The base rate, which varies from bank to bank, is determined by a bank’s cost of deposits/funds, its negative carry on cash reserve ratio (CRR) and statutory liquidity ratio (SLR), overhead costs and average return on net worth.
In terms of circular DBOD.No.Dir.BC.88/13.03.00/2009-2010 dated April 9, 2010 on "Guidelines on Base Rate", RBI has introduced the Base Rate system. Base Rate shall include all those elements of the lending rates that are common across all categories of borrowers. Banks may, however, choose any benchmark to arrive at the Base Rate for a specific tenor that may be disclosed transparently. Banks are free to use any other methodology, as is considered appropriate, provided it is consistent and are made available for supervisory review/scrutiny as and when required. Banks may determine their actual lending rates on loans and advances with reference to the Base Rate and by including such other customer specific charges as considered appropriate. Further, in terms of para 2(x) of the aforesaid circular, banks are required to review Base Rate at least once in a quarter with the approval of the Board or the Asset Liability Management Committees (ALCOs) as per the bank's practice.
Interest Rates on all export credit advances, on both pre-shipment and post-shipment will be changed as per base rate guidelines.
Question 77: With respect to any state-owned banks that provide export financing to support exports of agricultural products, and any private sector banks that receive any type of government support in the provision of export financing to support exports of agricultural products, please provide the following information for the most recent two years: specific agricultural commodities supported; value and destination of these commodities; average interest rate or premium charged; maximum tenor; average tenor of the transactions per year.
Reply: Information, as requested above, is not available with authorities. It is also to be noted that the export credit interest subvention scheme has not been extended beyond March 31, 2014 by the Government.
Pages 72-73, paragraph 3.153: The Secretariat’s Report identifies the types of export credit and financing provided by the Export-Import Bank of India (Exim Bank), with further information provided on the Exim Bank’s website at http://www.eximbankindia.in/sites/default/files/ AR202013-14%20English%20for%20web%20New.pdf.
With this in mind, please reply to the following:
Question 78: According to page 23 of the Exim Bank’s 2013-2014 report, the Exim Bank helped exporters to secure contracts for the sale of "agricultural processed foods." What type of support was provided by the Exim Bank to ensure that the exporter(s) secured the contract(s)? What was the value and destination(s) of these agricultural products?
Reply: The total disbursements for agricultural processed foods under the Bank's Buyers Credit program during 2013-14 amounted to US$ 9.07 million. Countries wherein contracts were secured are USA, Canada, Netherlands, Germany, Poland, Finland, UK, UAE, Saudi Arabia, Turkey, Morocco, Egypt, Ecuador, and Benin. The contracts were secured by the exporters on their own.
Question 79: According to page 24 of the Exim Bank’s 2013-2014 report, the Exim Bank provided Buyer’s Credit to support the export of "fruits and vegetables, rice, other agro-based products and commodities." What were the specific commodities and destinations supported by the Bank under this program? What is the maximum tenor, average tenor, and average premium rate for agricultural products under the Buyer’s Credit program?
Reply: The Buyer’s Credit quoted above is for short term in nature. These are with maximum and average tenor of 180 days. Fruits & Vegetables and Agro Commodities including Cumin Seed, Black Seed, Basmati Rice, Onion, Peanut, White Refined Sugar, Parboiled Rice, Mango Puree were exported to countries like Singapore, Brazil, U.A.E, Bangladesh, Turkey, Benin, and Kuwait, under this programme. The premium rates are based on the prevailing market, credit rating of the customer, country risk and also based on the Tenor of the Loan.
Question 80: Does the Exim Bank provide export credits to support agricultural commodity/product exports under any of its other programs? If so, what are the commodities, destinations, and terms (average premium rates, maximum and average tenors) of these programs?
Reply: Yes. Agricultural commodity/products towards which disbursements has been made are pulses, puri, vegetables, mango pulp, spices, rubber, amongst others. Destinations of such exports were U.K., Kuwait, Canada, Saudi Arabia, Yemen, Japan, Germany, UAE, USA, and Singapore.
Export credit is mainly extended in foreign currency at floating interest rates linked to Libor. The tenors are short term, and generally for the period of 6 months.
Page 73, paragraph 3.156: The Secretariat’s Report notes how export credit is counted in India.
Question 81: Does India have a requirement that a certain portion (or total amount) of government-supported export credits be provided to agriculture because of its designation as a "Priority Sector?" If so, what is that portion/amount?
Reply: There is no requirement that a specific portion of government supported export credit be provided to agriculture, because of its designation as "Priority Sector".
Page 73, paragraph 3.157: The Secretariat's Report discusses the Export Credit Guarantee Corporation (ECGC), with further information provided on the ECGC’s website at: http://www.ecgcindia.in/en/FinancialReports/2013-2014/Annual%20Report%202013-14.pdf.
According to the ECGC’s 2013-2014 Annual Report, in 2013-2014, 9 percent of ECGC’s short-term policies covered "Agriculture products (including Dairy Products and Processed Foods)" and 9 percent of the short-term policies covered "Cotton (Fibre, Yarn, Fabrics Made-ups) including Handloom."
With this in mind, please reply to the following:
Question 82: Under which specific short-term programs did ECGC provide support for agricultural products? Please provide a brief description of these programs.
Reply: There is no specific identified policy to cover exports of agriculture products or any specific commodity. The exports of a product can be covered under any of the policies depending upon the suitability to the exporter and features of the product.
Question 83: What were the specific agricultural products covered under these short-term policies? What was the total value covered by product and the destinations of these exports?
Reply: The question is not relevant. ECGC does not have any specific short term policy for agriculture products.