HIGHLIGHTS OF FOREIGN TRADE POLICY
New Delhi: August 31, 2004
1. Strategy:
(a) It is for the first time that a comprehensive Foreign Trade Policy is being notified. The Foreign Trade Policy takes an integrated view of the overall development of India’s foreign trade.
(b) The objective of the Foreign Trade Policy is two-fold:
(i) to double India’s percentage share of global merchandise trade by 2009; and
(ii) to act as an effective instrument of economic growth by giving a thrust to employment generation, especially in semi-urban and rural areas.
(c) The key strategies are:
(i) Unshackling of controls;
(ii) Creating an atmosphere of trust and transparency;
(iii) Simplifying procedures and bringing down transaction costs;
(iv) Adopting the fundamental principle that duties and levies should not be exported;
(v) Identifying and nurturing different special focus areas to facilitate development of India as a global hub for manufacturing, trading and services.
2. Special Focus Initiatives:
(a) Sectors with significant export prospects coupled with potential for employment generation in semi-urban and rural areas have been identified as thrust sectors, and specific sectoral strategies have been prepared.
(b) Further sectoral initiatives in other sectors will be announced from time to time. For the present, Special Focus Initiatives have been prepared for Agriculture, Handicrafts, Handlooms, Gems & Jewellery and Leather & Footwear sectors.
(c) The threshold limit of designated ‘Towns of Export Excellence’ is reduced from Rs. 1000 crores to Rs. 250 crores in these thrust sectors.
3. Package for Agriculture:
The Special Focus Initiative for Agriculture includes:
(a) A new scheme called Vishesh Krishi Upaj Yojana has been introduced to boost exports of fruits, vegetables, flowers, minor forest produce and their value added products.
(b) Duty free import of capital goods under EPCG scheme.
(c) Capital goods imported under EPCG for agriculture permitted to be installed anywhere in the Agri Export Zone.
(d) ASIDE funds to be utilized for development for Agri Export Zones also.
(e) Import of seeds, bulbs, tubers and planting material has been liberalized.
(f) Export of plant portions, derivatives and extracts has been liberalized with a view to promote export of medicinal plants and herbal products.
4. Gems & Jewellery:
(a) Duty free import of consumables for metals other than gold and platinum allowed up to 2% of FOB value of exports.
(b) Duty free re-import entitlement for rejected jewellery allowed up to 2% of FOB value of exports.
(c) Duty free import of commercial samples of jewellery increased to Rs.1 lakh.
(d) Import of gold of 18 carat and above shall be allowed under the replenishment scheme.
5. Handlooms & Handicrafts:
(a) Duty free import of trimmings and embellishments for Handlooms & Handicrafts sectors increased to 5% of FOB value of exports.
(b) Import of trimmings and embellishments and samples shall be exempt from CVD.
(c) Handicraft Export Promotion Council authorised to import trimmings, embellishments and samples for small manufacturers.
(d) A new Handicraft Special Economic Zone shall be established.
6. Leather & Footwear:
(a) Duty free entitlements of import trimmings, embellishments and footwear components for leather industry increased to 3% of FOB value of exports.
(b) Duty free import of specified items for leather sector increased to 5% of FOB value of exports.
(c) Machinery and equipment for Effluent Treatment Plants for leather industry shall be exempt from Customs Duty.
7. Export Promotion Schemes:
(a) Target Plus:
A new scheme to accelerate growth of exports called ‘Target Plus’ has been introduced.
Exporters who have achieved a quantum growth in exports would be entitled to duty free credit based on incremental exports substantially higher than the general actual export target fixed. (Since the target fixed for 2004-05 is 16%, the lower limit of performance for qualifying for rewards is pegged at 20% for the current year).
Rewards will be granted based on a tiered approach. For incremental growth of over 20%, 25% and 100%, the duty free credits would be 5%, 10% and 15% of FOB value of incremental exports.
(b) Vishesh Krishi Upaj Yojana:
Another new scheme called Vishesh Krishi Upaj Yojana (Special Agricultural Produce Scheme) has been introduced to boost exports of fruits, vegetables, flowers, minor forest produce and their value added products.
Export of these products shall qualify for duty free credit entitlement equivalent to 5% of FOB value of exports.
The entitlement is freely transferable and can be used for import of a variety of inputs and goods.
(c) ‘Served from India’ Scheme:
To accelerate growth in export of services so as to create a powerful and unique ‘Served from India’ brand instantly recognized and respected the world over, the earlier DFEC scheme for services has been revamped and re-cast into the ‘Served from India’ scheme.
Individual service providers who earn foreign exchange of at least Rs.5 lakhs, and other service providers who earn foreign exchange of at least Rs.10 lakhs will be eligible for a duty credit entitlement of 10% of total foreign exchange earned by them.
In the case of stand-alone restaurants, the entitlement shall be 20%, whereas in the case of hotels, it shall be 5%.
Hotels and Restaurants can use their duty credit entitlement for import of food items and alcoholic beverages.
(d) EPCG:
(i) Additional flexibility for fulfillment of export obligation under EPCG scheme in order to reduce difficulties of exporters of goods and services.
(ii) Technological upgradation under EPCG scheme has been facilitated and incentivised.
(iii) Transfer of capital goods to group companies and managed hotels now permitted under EPCG.
(iv) In case of movable capital goods in the service sector, the requirement of installation certificate from Central Excise has been done away with.
(v) Export obligation for specified projects shall be calculated based on concessional duty permitted to them. This would improve the viability of such projects.
(e) DFRC:
Import of fuel under DFRC entitlement shall be allowed to be transferred to marketing agencies authorized by the Ministry of Petroleum and Natural Gas.
(f) DEPB:
The DEPB scheme would be continued until replaced by a new scheme to be drawn up in consultation with exporters.
8. New Status Holder Categorization:
(a) A new rationalized scheme of categorization of status holders as Star Export Houses has been introduced as under:
Category Total performance over three years
One Star Export House 15 crore
Two Star Export House 100 crores
Three Star Export House 500 crores
Four Star Export House 1500 crores
Five Star Export House 5000 crores
(b) Star Export Houses shall be eligible for a number of privileges including fast-track clearance procedures, exemption from furnishing of Bank Guarantee, eligibility for consideration under Target Plus Scheme etc.
9. EOUs:
(a) EOUs shall be exempted from Service Tax in proportion to their exported goods and services.
(b) EOUs shall be permitted to retain 100% of export earnings in EEFC accounts.
(c) Income Tax benefits on plant and machinery shall be extended to DTA units which convert to EOUs.
(d) Import of capital goods shall be on self-certification basis for EOUs.
(e) For EOUs engaged in Textile & Garments manufacture leftover materials and fabrics upto 2% of CIF value or quantity of import shall be allowed to be disposed of on payment of duty on transaction value only.
(f) Minimum investment criteria shall not apply to Brass Hardware and Hand-made Jewellery EOUs (this facility already exists for Handicrafts, Agriculture, Floriculture, Aquaculture, Animal Husbandry, IT and Services).
10. Free Trade and Warehousing Zone:
(i) A new scheme to establish Free Trade and Warehousing Zone has been introduced to create trade-related infrastructure to facilitate the import and export of goods and services with freedom to carry out trade transactions in free currency. This is aimed at making India into a global trading-hub.
(ii) FDI would be permitted up to 100% in the development and establishment of the zones and their infrastructural facilities.
(iii) Each zone would have minimum outlay of Rs.100 crores and five lakh sq. mts. built up area.
(iv) Units in the FTWZs would qualify for all other benefits as applicable for SEZ units.
11 Import of Second hand Capital Goods
a. Import of second-hand capital goods shall be permitted without any age restrictions.
b. Minimum depreciated value for plant and machinery to be re-located into India has been reduced from Rs.50 crores to Rs.25 crores.
12. Services Export Promotion Council:
An exclusive Services Export Promotion Council shall be set up in order to map opportunities for key services in key markets, and develop strategic market access programmes, including brand building, in co-ordination with sectoral players and recognized nodal bodies of the services industry.
13. Common Facilities Centre:
Government shall promote the establishment of Common Facility Centres for use by home-based service providers, particularly in areas like Engineering & Architectural design, Multi-media operations, software developers etc., in State and District-level towns, to draw in a vast multitude of home-based professionals into the services export arena.
14 Procedural Simplification & Rationalisation Measures:
(a) All exporters with minimum turnover of Rs.5 crores and good track record shall be exempt from furnishing Bank Guarantee in any of the schemes, so as to reduce their transactional costs.
(b) All goods and services exported, including those from DTA units, shall be exempt from Service Tax.
(c) Validity of all licences/entitlements issued under various schemes has been increased to a uniform 24 months.
(d) Number of returns and forms to be filed have been reduced. This process shall be continued in consultation with Customs & Excise.
(e) Enhanced delegation of powers to Zonal and Regional offices of DGFT for speedy and less cumbersome disposal of matters.
(f) Time bound introduction of Electronic Data Interface (EDI) for export transactions. 75% of all export transactions to be on EDI within six months.
15. Pragati Maidan:
In order to showcase our industrial and trade prowess to its best advantage and leverage existing facilities, Pragati Maidan will be transformed into a world-class complex. There shall be state-of-the-art, environmentally-controlled, visitor friendly exhibition areas and marts. A huge Convention Centre to accommodate 10,000 delegates with flexible hall spaces, auditoria and meeting rooms with high-tech equipment, as well as multi-level car parking for 9,000 vehicles will be developed within the envelope of Pragati Maidan.
16. Legal Aid:
Financial assistance would be provided to deserving exporters, on the recommendation of Export Promotion Councils, for meeting the costs of legal expenses connected with trade-related matters.
17. Grievance Redressal:
A new mechanism for grievance redressal has been formulated and put into place by a Government Resolution to facilitate speedy redressal of grievances of trade and industry.
18. Quality Policy:
(a) DGFT shall be a business-driven, transparent, corporate oriented organization.
(b) Exporters can file digitally signed applications and use Electronic Fund Transfer Mechanism for paying application fees.
(c) All DGFT offices shall be connected via a central server making application processing faster. DGFT HQ has obtained ISO 9000 certification by standardizing and automating procedures.
19. Bio Technology Parks
Biotechnology Parks to be set up which would be granted all facilities of 100% EOUs.
20. Co-acceptance/ Avalisation introduced as equivalent to irrevocable letter of credit to provide wider flexibility in financial instrument for export transaction.
21. Board of Trade:
The Board of Trade shall be revamped and given a clear and dynamic role. An eminent person or expert on trade policy shall be nominated as President of the Board of Trade, which shall have a Secretariat and separate Budget Head, and will be serviced by the Department of Commerce.
*******
Press Information Bureau
Government of India
****
GLOSSARY OF TERMS – FOREIGN TRADE POLICY
New Delhi: August 31, 2004
FTP Refers to Foreign Trade Policy, announced by the Commerce & Industry Minister on 31st August, 2004. It is a 5-year Policy (September 2004 -- March 2009), which takes effect from September 1, 2004.
Exim Policy Refers to Export and Import (Exim) Policy. Exim Policy has got incorporated into the comprehensive Foreign Trade Policy, which was announced by the Commerce & Industry Minister on 31st August, 2004.
DGFT Directorate General of Foreign Trade, which is headed by the Director General of Foreign Trade. The office of the DGFT is responsible for formulating and execution of Foreign Trade Policy, including licensing. Formerly (till 1991), was known as the Chief Controller of Imports & Exports (CCI&E).
EPZs/EOUs EPZ means Export Processing Zones which are special enclaves, separated from the Domestic Tariff Area (DTA), to provide an internationally competitive duty-free environment for export production. EOU means Export Oriented Units. The EOU scheme is complementary to the EPZ scheme, except that it is widely dispersed in location, unlike EPZs, which are set up at specific locations.
SEZs SEZs means Special Economic Zones In principle approvals have already been given for setting up of 26 new SEZs (state government/private sector) at Nanguneri (Tamil Nadu), Paradeep (Orissa), Gopalpur (Orissa), Kulpi (West Bengal), Bhadohi (UP), Kanpur (UP), Kakinada (Andhra Pradesh) Indore (MP), Greater Noida (UP), Salt Lake (West Bengal), Hassan (Karnataka) Positra (Gujarat), Navi-Mumbai (Maharashtra), Moradabad (UP), Visakhapatnam (A. P.), Vallarpadam/Puthuvypeen (Kerala), Kopta - Maha Mumbai (Maharashtra), Sitapura – Jaipur (Rajasthan), Boranada, Jodhpur (Rajasthan), Dahej (Gujarat), Baikampady (Karnataka), Mundra (Gujarat), Ranchi (Jharkhand), Kolkatta (West Bengal) and Ennore (Tamil Nadu). Besides these, eight EPZs viz., at Kandla and Surat (Gujarat), Cochin (Kerala), Santa Cruz (Mumbai-Maharashtra), Falta (West Bengal), Madras (Tamil Nadu), Visakhapatnam (Andhra Pradesh) and Noida (Uttar Pradesh) have been converted into SEZs.
FTWZ Free Trade and Warehousing Zone, a new scheme announced in the Foreign Trade Policy.
AEZs Refers to a scheme of Agricultural Export Zones. So far, 48 AEZs have been approved in 19 States by the Department of Commerce.
BTP BTP means Biotechnology Park as notified by Director General of Foreign Trade on the recommendation of the Department of Biotechnology
STP STP means Software technology Park
E-Commerce Refers to electronic commerce. In the context of Foreign Trade Policy, e-commerce relates to electronic filing and processing of applications etc.
EPCG EPCG refers to the Export Promotion Capital Goods (EPCG) Scheme, which gives the manufacturer facility for import of capital goods for export production at concessional rate of duty (5 per cent) against certain level of export obligation over a period of time.
Duty Exemption Scheme/Duty Free Import of Inputs - Allows duty-free import of inputs for exports under Advance Licence, Duty Entitlement Pass Book (DEPB) and Duty Free Replenishment Certificate (DFRC) Scheme.
Advance Licence - Advance Licence is granted for import of inputs without payment of customs duties. It is issued in accordance with the Policy and procedures in force and subject to fulfilment of time-bound export obligation. Such licences can be issued for import of inputs for use in the export production as well as for replenishment of the inputs already used in the export product.
DEPB - Refers to the Duty Entitlement Pass Book to neutralise the incidence of basic customs duty on the import content of export product. This is provided by way of grant of duty credit against the export product at specified rates. The DEPB Scheme which was notified on 1/4/1997 consisted of (a) Post-export DEPB and (b) Pre-export DEPB. The pre-export DEPB scheme was abolished w.e.f. 1/4/2000. Under the post-export DEPB, which is issued after exports, the exporter is given a duty entitlement Pass Book at a pre-determined credit on the FOB value. The DEPB allows import of any items except the items which are otherwise restricted for imports.
Input-Output Norms -The norms which define the amount of input/inputs required to manufacture a unit of output.
DFRC Refers to the Duty Free Replenishment Certificate Scheme which was introduced from 1/4/2000 replacing Transferable Advance Licensing Scheme. The scheme is available to merchant exporters as well as to manufacturer exporters. However, it covers only items which are covered under standard input-output norms notified by DGFT.
Deemed Exports-
Refers to those transactions in which the goods supplied do not leave
the country and the payment for the goods is received by the supplier in India.
FoB -FoB means Free on Board -- i.e., when an exporter delivers goods "free on board", he pays all charges involved in getting them actually onto the ship.
NFE- Refers to Net Foreign Exchange. Net Foreign Exchange earning is calculated as a percentage of exports (NFEP).
ISO-9000- Refers to international standards, laid down by the International Standards Organisation.
Manufacturer Exporter - Manufacturer-exporter means a person who exports goods manufactured by him or intends to export such goods.
Merchant Exporter-Merchant- Exporter means a person engaged in trading activities and exporting or intending to export goods.
One to Five Star Export House- With a view to building marketing infrastructure and expertise required for export promotion, exporters with certain level of export performance are conferred the status of One to Five Star Export House
Registration cum Membership Certificate - Registration-cum-Membership Certificate (RCMC) means a certification certification of registration and membership granted to an exporter by an Export Promotion Council (EPC) or other competent authority.
Value addition Value addition refers to the increment added in the process of manufacture of a particular item, which also becomes part of its price.
QRs QRs mean Quantitative Restrictions. QRs refer to specific limits imposed by countries on the quantity or value of goods that can be imported or exported. QRs are non-tariff measures which are taken to regulate or prohibit international trade. QRs specifically refer to measures such as licensing requirements for exports/imports; quotas, ceilings etc.
ITC (HS) Refers to Indian Trade Classification (Harmonised System). It is a system of classification of products for the purposes of export and import.
VKUJ Vishesh Krishi Upaj Yojana, a new scheme introduced in the Foreign Trade Policy (2004-2009) as part of the package for agriculture.
SEPC An exclusive Services Export Promotion Council announced in the Foreign Trade Policy to map opportunities for key services in key markets.
******************
SB/PM/MRS
Press Information
Bureau
Government of India
****
New Delhi: August 31, 2004
Shri Kamal Nath, Union Minister for Commerce & Industry, today unveiled India’s first-ever Foreign Trade Policy (2004-2009), aimed at making India a major player in world trade. Underlining the importance of taking an all encompassing and comprehensive view for the overall development of India’s foreign trade, the Minister said that while incorporating the existing practice of enunciating an annual Exim Policy, it was necessary to go much beyond and take an integrated approach to the developmental requirements of India’s foreign trade.
Within this context, the Policy is built around 2 major objectives, namely (a) to double India’s percentage share of global merchandise trade by 2009; and (b) to act as an effective instrument of economic growth by giving a thrust to employment generation, especially in semi-urban and rural areas.
In order to achieve the objectives of the Policy of giving a massive push to exports while generating employment, Shri Kamal Nath indicated the following 10 key strategies: (i) Unshackling of controls and creating an atmosphere of trust and transparency; (ii) Simplifying procedures and bringing down transaction costs; (iii) Neutralising incidence of all levies and duties on inputs used in export products, based on the fundamental principle that duties and levies should not be exported; (iv) Facilitating development of India as a global hub for manufacturing, trading and services; (v) Identifying and nurturing special focus areas which would generate additional employment opportunities, particularly in semi-urban and rural areas; (vi) Facilitating technological and infrastructural upgradation of all the sectors of the Indian economy, especially through import of capital goods and equipment, thereby increasing value addition and productivity, while attaining internationally accepted standards of quality; (vii) Avoiding inverted duty structures and ensuring that our domestic sectors are not disadvantaged in the Free Trade Agreements/Regional Trade Agreements/Preferential Trade Agreements entered into in order to enhance our exports; (viii) Upgrading the infrastructural network related to the entire Foreign Trade chain, to international standards; (ix) Revitalising the Board of Trade by redefining its role; and (x) Activating Indian Embassies as key players in the export strategy and linking the Commercial Wings abroad through an electronic platform for real time trade intelligence.
In a major move towards unshackling of controls, all goods and services exported, including those from Domestic Tariff Area (DTA) have been exempt from service tax and all exporters with minimum turnover of Rs. 5 crore and good track record have been exempted from furnishing Bank Guarantees in any of the schemes so as to reduce their transaction costs.
Announcing a special package for agriculture which has the largest potential for enhancing employment in some of the poorest regions of the country, Shri Kamal Nath said a new scheme called "Vishesh Krishi Upaj Yojana" was being introduced to boost exports of flowers, fruits, vegetables, minor forest produce and their value-added products. Export of these products would qualify for duty-free credit entitlement equal to 5% of the FOB value of exports and capital goods imported under EPCG (Export Promotion Capital Goods) for agriculture would be duty-free.
A new scheme called "Target Plus" to achieve a quantum growth in exports has been introduced, under which, exporters who achieve a quantum growth in exports would be entitled to duty-free credit based on incremental exports substantially higher than the general annual export target. For incremental growth of over 20%, 25% and 100%, the duty free credits would be 5%, 10% and 15% respectively, of FOB value of incremental exports.
A number of improvements to the EPCG scheme were announced by the Minister including additional flexibility for fulfilment of export obligation in order to ease difficulties of exports of goods and services and facilitation and incentivisation of technological upgradation.
Shri Kamal Nath said that the DEPB (Duty Entitlement Pass Book) Scheme would be continued till it is replaced by a new scheme, which will be drawn up in consultation with the exporters.
A new scheme to establish Free Trade and Warehousing Zones (FTWZs) has also been introduced to make India a global trading hub. The aim would be "to create trade-related infrastructure to facilitate the import and export of goods and services with freedom to carry out trade transactions in free currency", the Minister said. Foreign Direct Investment (FDI) would be permitted upto 100% in the development and establishment of the Zones and their infrastructure facilities. Each Zone would have a minimum outlay of Rs. 100 crore and units in the FTWZs would qualify for all other benefits as applicable to SEZ units.
The Minister said that sectors with significant export prospects along with employment generation potential in semi-urban and rural areas had been identified and specific sectoral strategies – Special Focus Initiatives – prepared for sectors viz., handicrafts, handlooms, gems & jewellery and leather & footwear sectors, besides agriculture and further sectoral initiative in other sectors would be announced from time to time.
Stating that handlooms and handicrafts were the main stakes of India’s cottage sector and increased exports from these sectors would take the benefit of trade down to the grassroots levels, Shri Kamal Nath announced the following important steps for the handloom and handicraft sectors: Increase in duty-free import of trimmings and embellishments in these sectors to 5% of FOB value of exports, which would also be exempt from countervailing duty (CVD); authorisation to the Handicraft Export Promotion Council to import trimmings, embellishment samples for small manufacturers, who were unable to do this on their own; and Establishment of a new Handicraft Special Economic Zone.
The threshold limit of designated ‘Towns of Export Excellence’ is reduced from Rs. 1000 crore to Rs. 250 crore in these thrust sectors.
Recognising the role of EOUs, the Policy extends several benefits to EOUs including exemption of EOUs from service tax in proportion to their exported goods and services; and permission to retain 100% of export earnings in EEFC (Exchange Earners Foreign Currency) Account.
Shri Kamal Nath said that Biotechnology Parks would be established in the country which would get all facilities of 100% Export Oriented Units (EOUs). Application of biotechnology would pay rich dividends in terms of new products and technologies and Biotechnology Parks would help harness this important new frontier of science, he said.
In order to boost export of services from India, the Minister announced three major initiatives – (a) introduction of a "Served From India" Scheme as a brand instantly recognised the world over, under which individual service providers who earn foreign exchange of at least Rs. 10 lakhs would be eligible for a duty credit entitlement of 10% of total foreign exchange earned by them. In the case of stand-alone restaurants, the entitlement would be 20%, whereas in the case of hotels, it would be 5%. (b) an exclusive Services Export Promotion Council would be set up in order to map opportunities in key services in key markets and develop strategic market access programmes, including brand building in coordination with sectoral players and recognised nodal bodies of the services industry. And (c) government would promote establishment of Common Facility Centres for use by home-based service providers, particularly in areas like Engineering & Architectural design, Multi-media operations, software developers etc., in State and District-level towns, to draw in a vast multitude of home-based professionals into the services export arena.
Shri Kamal Nath also announced a new rationalised scheme of categorisation of status holder as "Star Export Houses", designating them from One Star to Five Star depending on their total exports during the current and previous three years. "The entry level for qualifying for status is now Rs. 15 crores in three years. We are confident that this will bestow status on a large number of hitherto unrecognised small exporters", The Minister said.
Further, as part of the drive to simplify procedures and reduce transaction cost, Shri Kamal Nath announced several important measures, including increasing the validity of all licences and entitlements issued under various schemes to a uniform 24 months; reduction in the number of returns and forms to be filed; permission to import second-hand capital goods without any age restriction as cost effective capital goods were an important component of industrial growth; delegation of powers to zonal and regional offices of DGFT to speed up disposal and time-bound introduction of electronic data interchange (EDI), with 75% of all export transactions to be on EDI within six months.
A new mechanism for grievance redressal has also been put in place to facilitate speedy redressal of grievances of trade and industry, "which, it is hoped, would substantially reduce litigation and foster relationship of partnership", the Minister said.
The Minister also announced that the Board of Trade would be revamped and given a clear and dynamic role. There would be continuous interaction between the Board of Trade and Government in order to fulfil the objective of boosting exports.
Referring to the Framework Agreement for a Free Trade Area with Thailand entered into yesterday, the Minister said that these Framework Agreements were directed towards increased trade with those countries and groupings. "The dynamics of a liberalised trading system sometimes results in injury caused to domestic industry on account of dumping. When this happens, effective measures to redress such injury will be taken. Financial assistance would be provided to deserving exporters, on the recommendation of Export Promotion Councils, for meeting the costs of legal expenses connected with trade-related matters", he said.
Shri Kamal Nath said that this Foreign Trade Policy was essentially a roadmap for the development of India’s foreign trade. By virtue of its very dynamics, the trade policy could not be fully comprehensive and exhaustive in all its details. It would naturally require modifications from time to time. This would be done through continuous updating based on the changing dynamics of international trade and in partnership with the business and industry.
**************
SB/PM/MRS
Press Information Bureau
Government of India
****
SPECIAL FOCUS INITIATIVES IN FOREIGN TRADE POLICY
New Delhi: August 31, 2004
Shri Kamal Nath, Union Minister of Commerce & Industry, today announced special focus initiatives to boost export from identified sectors having significant potential for employment generation in semi-urban and rural areas. For these sectors, specific sectoral strategies have been prepared and further sectoral initiatives in other sectors will be announced from time to time.
For the present, special focus initiatives have been prepared for 5 sectors – agriculture, handicrafts, handlooms, gems & jewellery and leather & footwear sectors. The threshold limit of designated ‘Towns of Export Excellence’ is reduced from Rs. 1000 crore to Rs. 250 crore in these thrust sectors.
**********
SB/PM/MRS
Press Information Bureau
Government of India
****
PACKAGE FOR AGRICULTURE IN FOREIGN TRADE POLICY
New Delhi: August 31, 2004
Shri Kamal Nath, Union Minister of Commerce & Industry, today announced a package for agriculture as part of the Foreign Trade Policy (2004-09), as below:
(a) A new scheme called Vishesh Krishi Upaj Yojana has been introduced to boost exports of fruits, vegetables, flowers, minor forest produce and their value added products.
(b) Duty free import of capital goods under EPCG scheme.
(c) Capital goods imported under EPCG for agriculture permitted to be installed anywhere in the Agri Export Zone.
(d) ASIDE (Assistance to States for Infrastructure Development for Exports) scheme funds to be utilised for development for Agri Export Zones also.
(e) Import of seeds, bulbs, tubers and planting material has been liberalised.
Export of plant portions, derivatives and extracts has been liberalised with a view to promote export of medicinal plants and herbal products.
***********
SB/PM/MRS
Press Information Bureau
Government of India
****
BOOST TO
GEMS & JEWELLERY AND LEATHER & FOOTWEAR
IN FOREIGN TRADE POLICY
New Delhi: August 31, 2004
The Foreign Trade Policy announced by Shri Kamal Nath, Union Minister of Commerce & Industry, today gives a major boost to exports from the gems & jewellery and leather & footwear sectors, as below:
Gems & Jewellery
(a) Duty free import of consumables for metals other than gold and platinum allowed up to 2% of FOB value of exports.
(b) Duty free re-import entitlement for rejected jewellery allowed up to 2% of FOB value of exports.
(c) Duty free import of commercial samples of jewellery increased to Rs.1 lakh.
(d) Import of gold of 18 carat and above shall be allowed under the replenishment scheme.
Leather & Footwear:
(a) Duty free entitlements of import trimmings, embellishments and footwear components for leather industry increased to 3% of FOB value of exports.
(b) Duty free import of specified items for leather sector increased to 5% of FOB value of exports.
(c) Machinery and equipment for Effluent Treatment Plants for leather industry shall be exempt from Customs Duty.
**********
SB/PM/MRS
Press Information Bureau
Government of India
****
NEW STATUS HOLDER CATEGORISATION – FOREIGN TRADE POLICY 2004-2009
New Delhi: August 31, 2004
The Foreign Trade Policy 2004-09 announced by Shri Kamal Nath, Union Minister of Commerce & Industry, today has introduced a new rationalised scheme of categorisation of status holders as ‘Star Export House’ as under:
Category Total performance over three years
One Star Export House 15 crores
Two Star Export House 100 crores
Three Star Export House 500 crores
Four Star Export House 1500 crores
Five Star Export House 5000 crores
Star Export Houses would be eligible for a number of privileges including fast-track clearance procedures, exemption from furnishing of Bank Guarantee, eligibility for consideration under Target Plus Scheme etc.
***********
SB/PM/MRS
Press
Information Bureau
Government of India
****
PROCEDURAL
SIMPLIFICATION AND RATIONALISATION MEASURES –
FOREIGN TRADE POLICY 2004-2009
New Delhi: August 31, 2004
The Foreign Trade Policy 2004-09 announced by Shri Kamal Nath, Union Minister of Commerce & Industry, today announced the following procedural simplification and rationalisation measures:
All exporters with minimum turnover of Rs. 5 crores and good track record shall be exempt from furnishing Bank Guarantee in any of the schemes, so as to reduce their transactional costs.
All goods and services exported, including those from DTA units, would be exempt from Service Tax.
Validity of all licences/entitlements issued under various schemes has been increased to a uniform 24 months.
Number of returns and forms to be filed have been reduced. This process would be continued in consultation with Customs & Excise.
Enhanced delegation of powers to Zonal and Regional offices of DGFT for speedy and less cumbersome disposal of matters.
Time bound introduction of Electronic Data Interface (EDI) for export transactions. 75% of all export transactions to be on EDI within six months.
Quality Policy:
DGFT shall be a business-driven, transparent, corporate oriented organisation.
Exporters can file digitally signed applications and use Electronic Fund Transfer Mechanism for paying application fees.
All DGFT offices shall be connected via a central server making application processing faster. DGFT HQ has obtained ISO 9000 certification by standardising and automating procedures.
Co-acceptance/ Avalisation introduced as equivalent to irrevocable letter of credit to provide wider flexibility in financial instrument for export transaction.
***********
SB/PM/MRS
Press Information Bureau
Government of India
***
New Delhi: August 30, 2004
The Protocol to implement the Early Harvest Scheme (EHS) under the Framework Agreement on Free Trade Area (FTA) between India and Thailand was signed here today, marking a historical landmark in India’s relations with Thailand. The Protocol was signed by Shri Kamal Nath, Union Minister of Commerce & Industry, on behalf of Government of India and Mr. Watana Muangsook, Minister of Commerce, on behalf of Government of Thailand. Shri E.V.K.S. Elangovan, Minister of State for Commerce & Industry; Dr. Parnpree Bahiddha-Nukara, Vice Minister of Commerce, Thailand; and Shri Dipak Chatterjee, Commerce Secretary were present at the signing ceremony along with senior officials of both the countries and representatives of trade and industry. A Framework Agreement for establishing FTA between India and Thailand was signed by the Commerce Ministers of the both sides on 9th October, 2003 in Bangkok, Thailand.
The key elements of the Framework Agreement cover FTA in Goods, Services and Investment, and Areas of Economic Cooperation. The Framework Agreement also provides for an EHS under which common items of export interest to the sides have been agreed for elimination of tariffs on a fast-track basis.
The launch of the implementation of the Early Harvest Scheme provides for the elimination of tariffs on a common list of 82 items over a period of two years. The list covers approximately 7 percent of bilateral trade and includes items which are of export interest to both countries.
The highlights of various components of the Framework Agreement are as follows:
(i) FTA in Goods
Negotiations to commence in January, 2004 and concluded by March 2005.
Establishment of Free Trade Area (zero duty imports) by 2010.
(ii) FTA in Services
Negotiations to commence in January 2004 and concluded by January 2006.
(iii) FTA in Investments
Negotiations to commence in January 2004 and concluded by January 2006.
(iv) Areas of Economic Cooperation
Areas of economic cooperation to include trade facilitation measures; sectors identified for cooperation; and trade & investment promotion measures.
(v) Early Harvest Scheme (EHS)
Both sides have agreed to have a common list of 84 items (6 digit HS level) for exchange of tariff concessions.
Tariffs on these items will be phased out in 2 years timeframe starting from 1st March, 2004.
Shri Kamal Nath said that the signing of Protocol marked a historical landmark in the bilateral relations between India and Thailand and said that it also was another major step in India’s "Look East Policy". Thailand now becomes the second country apart from the FTA with Sri Lanka with which India would be implementing an FTA in a phased manner, he said, adding that "apart from our bilateral engagement with Thailand, we are also engaged in negotiations with Singapore, ASEAN and BIMST-EC to strengthen economic cooperation. We believe that our bilateral engagement with Thailand would act as a catalyst towards our overall engagement with ASEAN and BIMST-EC".
The Minister said that the Agreement would help in increasing the formation of joint ventures and investments in both countries and hoped that business communities of both countries would take the advantage of the enabling environment being provided through this Agreement.
The total trade between India and Thailand has almost doubled from US $ 777.15 million in 1999-2000 to US $ 1.4 billion in 2003-04. The Joint Study Group, which was constituted to examine the feasibility of FTA between India and Thailand, predicted that an FTA would quickly lead to a doubling of trade between the two countries.
Shri Kamal Nath also launched the Protocol on the Website of Department of Commerce on the occasion. As per the Framework Agreement, the EHS was to commence form 1st March 2004. However, since the Interim Rules of Origin for implementing the EHS could not be finalised, the commencement of EHS was deferred. Now that the Rules of Origin have been finalised, both sides have agreed that its implementation could begin from 1st September, 2004.
**********
SB/PM/MRS
Press Information Bureau
Government of India
***
HIGHLIGHTS OF
THE FRAMEWORK AGREEMENT ON FREE TRADE AREA BETWEEN INDIA AND
THAILAND
New Delhi: August 30, 2004
The following are the highlights of the Framework Agreement on Free Trade Area (FTA) between India and Thailand:
(i) FTA in Goods
Negotiations to commence in January, 2004 and concluded by March 2005.
Establishment of Free Trade Area (zero duty imports) by 2010.
(ii) FTA in Services
Negotiations to commence in January 2004 and concluded by January 2006.
(iii) FTA in Investments
Negotiations to commence in January 2004 and concluded by January 2006.
(iv) Areas of Economic Cooperation
Areas of economic cooperation to include trade facilitation measures; sectors identified for cooperation; and trade & investment promotion measures.
(v) Early Harvest Scheme (EHS)
Both sides have agreed to have a common list of 84 items (6 digit HS level) for exchange of tariff concessions.
Tariffs on these items will be phased out in 2 years timeframe starting from 1st March, 2004.
**********
SB/PM/MRS
Press Information Bureau
Government of India
******
INDIA, JAPAN TO ENHANCE TRADE &
INVESTMENT TIES
JAPANESE TRADE MINSTER MEETS KAMAL NATH
New Delhi: August 25, 2004
India and Japan have decided to enhance the trade and investment ties from the current levels, which are well below the potential that exists between the two countries. This was indicated at a meeting between Shri Kamal Nath, Union Minister of Commerce & Industry and Mr. Shoichi Nakagawa, Minster of Economy, Trade and Energy of Japan, here today. Both the Ministers stressed the need to work out a suitable mechanism that would lead to a positive effect on the bilateral trade and investment relations.
During the meeting, Shri Kamal Nath said that Indian economy was showing robust growth with manufacturing as a major contributor to it and added that India had the capacity to become manufacturing hub in this part of the world. The visiting Minister said that Japanese business community had specific areas of interest in terms of trade and investment and pointed out the areas of energy, automobile and textiles as the sectors for cooperation. He noted that Japan imported almost 100% of its iron & ore minerals and requested to extend the contract of Indian supply to Japan. The Indian Minister said that the old agreement with Japan for the supply of iron & ore was valid till 2006 and added that there was enough time to see how it could be extended. The two Ministers also discussed issues of WTO and emphasised the need for broader cooperation on multilateral issues.
Japan’s share in India’s overall trade is 3.10%. During 2003-04, the bilateral trade was of the order of US $ 4.35 billion indicating a growth of 18% as compared to the corresponding period of last year. The major items which have registered growth in exports to Japan are oil meals, primary and semi finished iron & steel, ferro alloys, plastic and linoleum products and project goods etc.
***
SB/PM/MRS
Press Information Bureau
Government of India
******
New Delhi: August 25, 2004
India and the Gulf Cooperation Council (GCC)-comprising the six Gulf countries viz. Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE)- today signed an India-GCC Framework Agreement on Economic Cooperation (FAC), marking a new milestone in India’s relations with the Gulf countries. The Framework Agreement was signed by Shri Kamal Nath, Union Minister of Commerce & Industry on behalf of the Government of India and by H.E. Sheikh (Dr.) Mohammed Al-Sabbah Al-Salem Al-Sabbah, the Foreign Minister of the State of Kuwait on behalf of GCC at a ceremony which was also attended by Shri E.V.K.S.Elangovan, Minister of State for Commerce & Industry, Mr. Abdulrahman bin Hamad Al Attiyah, Secretary General of the GCC, Ambassadors of Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE), Counsul General of Bahrain, senior officials of the Government of India and representatives of business organisations.
The salient features of the India-GCC Framework Agreement on Economic Cooperation (FAC) include:
Both sides to consider ways and means for expanding and liberalising their trade relations including initiating discussions on the feasibility of a Free Trade Area (FTA) between them;
Both sides to make arrangements for setting up Joint Investment Projects and facilitating corporate investments in various fields;
Joint Committee on Economic Cooperation be formed under this Agreement, which will oversee implementation of the provisions of the FAC and other bilateral Agreement or Protocols and handling any difficulties or disputes arising from interpretation/implementation of the provision of the FAC etc.; and
Notwithstanding the proposed FAC, individual member states free to undertake bilateral activities with India in the fields covered by the FAC etc.
Both Shri Kamal Nath and H.E. Sheikh (Dr.) Mohammed Al-Sabbah Al-Salem Al-Sabbah, Foreign Minister of Kuwait, stressed that the Framework Agreement, which committed both sides to broadbased cooperation and long term partnership, would give a big boost to commercial and economic ties between India and Gulf including trade and investment. Shri Kamal Nath said that although the bilateral trade between India and Gulf countries had shown consistent increase with India’s exports to GCC amounting to US $ 7.02 billion and imports from GCC, excluding oil, at US $ 3.25 billion during 2003-04, the existing trade was not commensurate with the potential and the Framework Agreement signed today would enable both sides to exploit opportunities to maximum possible extent. It would also provide a framework for private sector on both sides to enter into profitable ventures in new areas.
In recent times, India’s traditional economic ties with GCC have become even stronger, especially due to increasing imports of oil and gas, growing trade and investment opportunities and presence of 3.5 million Indian workers in the region. The substantial oil and gas reserves of the GCC region play a vital role in fulfilling India’s energy needs and are integral to the country’s energy security. Today, however, Indo-GCC trade is not restricted to oil and petroleum products only; it is in fact extremely diversified, Shri Kamal Nath noted.
Earlier, H.E. Sheikh (Dr.) Mohammed Al-Sabbah Al-Salem Al-Sabbah, Foreign Minister of Kuwait along with Mr. Abdulrahman bin Hamad Al Attiyah, Secretary General of the GCC called on Shri Kamal Nath and had an exchange of views with him on cooperation between India and the Gulf countries. Shri Kamal Nath underlined the importance attached by India over the years to its special relations with the GCC and said that the signing of the Framework Agreement was an indication that both sides were committed to a new era of economic cooperation, which held immense possibilities for both sides. They also appreciated the fact that India-GCC trade had been on the upswing for the last several years with GCC emerging as an important trading partner of India, although potential remained to be fully exploited.
The UAE is the second largest importer of Indian goods, after the USA and Saudi Arabia is the 16th largest destination of Indian goods.
*********************
SB/PM/MRS
Press Information Bureau
Government of India
******
HIGHLIGHTS OF INDIA-GCC FRAMEWORK AGREEMENT ON ECONOMIC COOPERATION SIGNED ON 25TH AUGUST 2004
New Delhi: August 25, 2004
The highlights of the India-GCC Framework Agreement on Economic Cooperation signed on 25th August 2004 are:
Both sides to consider ways and means for expanding and liberalising their trade relations including initiating discussions on the feasibility of a Free Trade Area (FTA) between them;
Both sides to make arrangements for setting up Joint Investment Projects and facilitating corporate investments in various fields;
Joint Committee on Economic Cooperation be formed under this Agreement, which will oversee implementation of the provisions of the FAC and other bilateral Agreement or Protocols and handling any difficulties or disputes arising from interpretation/implementation of the provision of the FAC etc.; and
Notwithstanding the proposed FAC, individual member states free to undertake bilateral activities with India in the fields covered by the FAC etc.
N.B. Major commodities exported to GCC Member States from India include gems & jewellery, textile products, metal manufactures, machinery & instruments, iron & steel etc., while major non-oil items imported from GCC countries include gold, organic and inorganic chemicals, non-ferrous metals etc. India and the GCC both have a mutually collaborative role as seen in the fact that while the GCC can meet the oil requirements of India, India can meet the non-oil requirements of GCC.
*******************
SB/PM/MRS
Press Information Bureau
Government of India
******
FRAMEWORK AGREEMENT ON ECONOMIC COOPERATION BETWEEN INDIA AND GULF COUNTRIES TO BE SIGNED TOMORROW
New Delhi: August 24, 2004
The draft Framework Agreement on Economic Cooperation (FAC) between India and the Gulf Cooperation Council (GCC) consisting of the six Gulf states viz. Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE), will be signed here tomorrow, marking a major step towards having closer economic cooperation between India and Gulf countries. The Framework Agreement will be signed by Shri Kamal Nath, Union Minister of Commerce & Industry on behalf of the Government of India and by H.E. Sheikh (Dr.) Mohammed Al-Sabbah Al-Salem Al-Sabbah, the Foreign Minister of the State of Kuwait, who is visiting India from August 24-26, 2004.
The signing of the Framework Agreement is one of the major items on the agenda of the Kuwaiti Foreign Minister’s visit. Kuwait is also currently the Chairman of GCC. One of the highlights of the Framework Agreement is that it provides for exploring the possibility of a Free Trade Area (FTA) between India and the Gulf countries.
Gulf countries are a very important trading partner of India, accounting for over 11% of India’s global exports and with Saudi Arabia and UAE as the two top trading partners of India not only in the GCC block but in the entire West Asia and North Africa (WANA region). India’s exports to GCC amounted to US $ 7.02 billion in 2003-04, up by above 43% over the previous year.
***
SB/PM/MRS
Press Information Bureau
Government of India
*****
New Delhi: August 19, 2004
The 2004 annual conference of the Organisation for Economic Cooperation and Development (OECD) Global Forum on International Investment (GFII) will be held in New Delhi, during 19-22 October 2004. This is an annual event of the OECD held in different non-member countries. These events are being organised by the Government of India and supported by the Confederation of Indian Industry.
The first OECD-India Investment Roundtable will focus on "Opportunities and Policy Challenges for Investment in India". The Roundtable will provide an opportunity for policymakers and business representatives from OECD member countries, India and other non-member countries to discuss, inter alia: (i) India's investment policies: progress and future directions (ii) Sectoral FDI policies: the case of infrastructure and public utilities (iii) The road ahead: investment partnership with India.
The GFII will examine the role of international co-operation in enhancing the business environment and maximising the benefits of investment in developing countries. The three main areas of focus will be: (i) The OECD initiative on a Policy Framework for Investment as an operational tool to promote investment for development; (ii) Promoting corporate responsibility - defining the roles of government and business; and (ii) Maximising official development assistance - synergies for development.
Another important event being held in conjunction with the GFII will be the Regional Consultation of the Task Force on a "Policy Framework for Investment". This will be the first in a series of regional meetings of the Task Force as part of the on-going consultative process for the development of the Framework, called for during the 2003 OECD Ministerial. Participants will include Asian government investment officials, key players from the private-sector, representatives from APEC, the Asian Development Bank, ASEAN, UNESCAP and other interested GFII participants.
Attendance at all events will be by invitation alone. Further information on these events is available at the website
or
http://www.oecd.org/document/56/0,2340,en_2649_34863_32233656_1_1_1_1,00.html .
*****************
SB/PM/MRS
Press Information Bureau
Government of India
India's
Exports at a record high
India's foreign trade data: April-July, 2004-2005
New Delhi, 17 August, 2004
India's exports during April-July, 2004-2005 are valued at US $ 21931.10 million which is 25.57% higher than the level of US $ 17465.80 million during April-July, 2003-2004. This is over and above the 4.82 % export growth in April-July, 2003-04 over April July, 2002-03. In rupee terms, the exports were Rs.99153.71 crores, during April-July, 2004 2005 which is 21.20% higher than the value of exports during April-July, 2003-2004.
Exports during July, 2004 are valued at US $ 5433.04 million which is 18.81% higher than the level of US $ 4572.89 million during July, 2003. In rupee terms, the exports were Rs.25014.59 crores, which is 18.33% higher than the value of exports during July, 2003.
India's Imports during April-July,2004-2005 are valued at US $ 30457.28 million representing an increase of 33.48% over the level of imports valued at US $ 22818.03 million in April-July, 2003-2004.
Oil imports during April-July, 2004-05 are valued at US $ 9900.03 million which is 61.90% higher than oil imports valued at US $ 6114.92 million in the corresponding period last year. Non-oil imports during April-July,2004-05 are estimated at US $ 20557.25 million which is 23.07% higher than the level of such imports valued at US $ 16703.11 million in April-July,2003-04.
Imports during July, 2004 are valued at US $ 7437.27 million representing an increase of 31.60% over the level of imports valued at US $ 5651.62 million in July, 2003. In Rupee terms the imports increased by 31.06%.
The trade deficit for April-July, 2004-05 is estimated at US $ 8526.18 million which is higher than the deficit at US $ 5352.23 million during April-July, 2003-04.
Tables giving details of exports, imports and trade balance, according to the provisional estimates of Directorate General of Commercial Intelligence and Statistics (DGCI&S) are attached.
DEPARTMENT OF COMMERCE |
||
(Unadjusted for late returns) |
||
(US $ Million) |
||
July |
April-July |
|
| EXPORTS | ||
| 2003-2004* | 4572.89 |
17465.80 |
| 2004-2005 | 5433.04 |
21931.10 |
| %Grw 2004-2005/2003-2004 | 18.81 |
25.57 |
| IMPORTS | ||
| 2003-2004* | 5651.62 |
22818.03 |
| 2004-2005 | 7437.27 |
30457.28 |
| %Grw 2004-2005/2003-2004 | 31.60 |
33.48 |
| TRADE BALANCE | ||
| 2003-2004* | -1078.73 |
-5352.23 |
| 2004-2005 | -2004.23 |
-8526.18 |
| *Final figures as given by DGCI&S | ||
DEPARTMENT OF COMMERCE |
||
(Unadjusted for late returns) |
||
(Rs Crores) |
||
July |
April-July |
|
| EXPORTS | ||
| 2003-2004* | 21140.49 |
81808.16 |
| 2004-2005 | 25014.59 |
99153.71 |
| %Grw 2003-2004/2002-2003 | 18.33 |
21.20 |
| IMPORTS | ||
| 2003-2004* | 26127.43 |
106907.54 |
| 2004-2005 | 34242.40 |
137720.14 |
| %Grw 2003-2004/2002-2003 | 31.06 | 28.82 |
| TRADE BALANCE | ||
| 2003-2004* | -4986.94 |
-25099.38 |
| 2004-2005 | -9227.81 |
-38566.43 |
| *Final figures as given by DGCI&S | ||
Press Information Bureau
Government of India
*****
New Delhi: August 16, 2004
India and Thailand signed a Framework Agreement for Establishing Free trade Area on 9th October 2003 in Bangkok, Thailand. The Framework Agreement provides for negotiations for tariff reductions/elimination in order to establish India-Thailand Free Trade Area (FTA) covering trade in goods by 2010. The key elements for the Framework Agreement cover the FTA in Goods, Services and Investment and identified areas of Economic Cooperation. The Framework Agreement also provides for an Early Harvest Scheme (EHS) under which a common list of items has been agree for elimination of tariffs on fast track basis. The key elements are the subject of ongoing negotiations and have not been implemented as yet. The proposed establishment of Free Trade Area between India and Thailand is expected to promote bilateral trade and investment flows. This would depend on the complementarities and comparative advantages of various industries. Invariably, investment decisions are influenced not just by the changes in tariffs but also by other factors such as the cost and availability of raw materials, skilled manpower and infrastructural facilities.
This was stated by Shri E. V. K. S. Elangovan, Minister of State for Commerce & Industry, in a written reply here today in the Rajya Sabha.
********************
SB/PM/MRS
Press Information
Bureau
Government of India
*****
INDIA’S
OBJECTIVES ACHIEVED IN WTO FRAMEWORK AGREEMENT
KAMAL NATH’S STATEMENT IN PARLIAMENT
New Delhi: 16 August, 2004
India has achieved all its major objectives in the recent WTO Framework Agreement, which lays down the guidelines for further negotiations in the current Doha Round of multilateral trade negotiations. This was stated by Shri Kamal Nath in a statement made by him in the Lok Sabha and Rajya Sabha today on the proceedings of the General Council meeting of the World Trade Organisation (WTO) held in Geneva last month where the Framework Agreement was adopted by the WTO member countries on 1 August, 2004. He said that in the crucial area of agriculture, a) all forms of export subsidies would be eliminated by an end date, which was a major demand of India as the developed countries were giving hundreds of billions of dollars worth of support to their farmers every year, resulting in artificially low prices for their agri exports and hence this commitment by developed countries in the Agreement was a positive achievement. At the same time, the flexibility available to developing countries like India to provide certain subsidies for export of agricultural products would continue to be available for an even longer period. b) On trade distorting domestic support (given mainly by the developed countries) there would be a 20 % reduction in the first year of the implementation, i.e., on completion of the negotiations. c) The permissible de minimis support in respect of developed countries would be reduced from their present level of 5 % while developing countries like India that allocate almost all de minimis support to subsistence and resource poor farmers will not have any obligation to reduce their existing level of de minimis support of 10 %. d) The Blue Box, hitherto uncapped, will now be capped at 5 %. e) Market access for our agricultural products would increase as higher levels of cuts for higher rates of tariffs meant that developed countries would have to effect real and deeper cuts. f) the principle of proportionality would enable developing countries to make lower rates of reductions in tariff compared to developed countries. g) India would have greater flexibility in the number of sensitive products and their treatment than that permitted to developed countries. h) India would now be also able to designate a number of agricultural products as Special Products based on its food and livelihood security or rural development needs. And e) India would also now be able to use a Special Safeguard Mechanism against surge in imports, which would safeguard domestic producers in developing countries.
The Framework Agreement clearly stipulates that the negotiations will have to take into account the concerns of developing countries relating to rural development, food security and livelihood security needs in the matter of tariff reduction formula, the number and treatment of sensitive products, expansion of Tariff rate quotas and the implementation period, Shri Kamal Nath added.
Following is the full text of the Minister’s statement in the Parliament:
"I rise to make a statement on the proceedings of the General Council meeting of the WTO held at Geneva last month where a Framework Agreement was adopted by the Members on 1st August, 2004. A copy of the Framework Agreement is being placed on the Table of the House.
2. As the Honorable Members are aware, the Cancun Ministerial Conference of the WTO held in September 2003 ended in a stalemate since consensus could not emerge among Member countries on major issues under the Doha Work Programme. Since the multilateral process is important to India, we have been taking an active part in the revival of the Doha process by interacting with both the developing and the developed countries. As a result of these efforts, the Framework Agreement adopted, has ensured that the negotiations are back on track. It provides necessary guidance and parameters for further negotiations. The next Ministerial Conference is scheduled to be held in Hong Kong, China in December 2005.
3. The issues before the General Council were the same as those before the Cancun Ministerial Conference. Besides taking stock of the progress of negotiations on major issues like Agriculture, Non Agricultural Market Access and Services, review of progress on the development related issues like Implementation Issues and Special and Differential Treatment provisions was also to be made. A decision on the launch of negotiation on the four Singapore Issues of Trade and Investment, Trade and Competition Policy, Transparency in Government Procurement and Trade Facilitation was also required to be made.
4. Before participating in the General Council, we held wide-ranging consultations with stakeholders, political parties and trade unions. The inputs we received in these consultations helped us to shape our strategy in the negotiations.
5. I am happy to announce to the Hon Members that we have been able to achieve all our major objectives in this Framework Agreement. In the crucial area of Agriculture it has been agreed that:
(a) All forms of export subsidies would be eliminated by an end date. This was a major demand of ours, since the developed countries are extending support of hundreds of billions of dollars every year to their farmers, resulting in artificially low prices for their agri-exports. This commitment in the Agreement is therefore a positive achievement. At the same time the flexibility available to developing countries like India to provide certain subsidies for export of agricultural products would continue to be available for an even longer period, beyond the elimination of export subsidies by developed countries.
(b) On trade distorting domestic support, it has been possible to ensure that an immediate commitment in the form of 20 % reduction in overall trade distorting support would be made in the very first year itself. (Against this, during the entire implementation period of the Uruguay Round only 20 % cut was effected in Domestic Support). Besides, the permissible de minimis support in respect of developed countries would be reduced from the present level of 5%, while developing countries like India that allocate almost all de minimis support to subsistence and resource-poor farmers will not have any obligation to reduce their existing level of de minimis support of 10 %. Thus our concerns relating to protection of the support we extend to resource poor farmers have been adequately addressed.
(c) The Blue Box, hitherto uncapped, will be capped at 5% from the first year of the implementation period itself. A modified Blue Box can be created only after agreement among Members on the criteria, which would be subject to negotiations.
(d) On market access, the Agreement envisages that higher rates of tariff will face higher levels of cuts. Since the reduction required is from bound rates, which in the case of India are usually much higher than the applied rates, we have an adequate cushion of comfort. On the other hand, developed countries, which do not have this cushion, will have to effect real and deep cuts. Thus market access for our products would increase.
(e) Furthermore, the following elements in the Framework provide us the necessary comfort:
(i) the principle of proportionality will enable developing countries to make lower rates of reductions as compared to developed countries;
(ii) We would have greater flexibility in the number of sensitive products and their treatment than that permitted to developed countries;
(iii) we are also eligible to designate an appropriate number of products as Special Products (this is available only to developing countries) based on our food & livelihood security or rural development needs;
(iv) the Framework Agreement also provides for use of a Special Safeguard Mechanism triggered by prices or quantity, against surge in imports which would safeguard domestic producers in developing countries;
(v) the Framework Agreement clearly stipulates that the negotiations will have to take into account the concerns of developing countries relating to rural development, food security and livelihood security needs as regards tariff reduction formula, the number and treatment of sensitive products, expansion of the tariff quotas and the implementation period.
6. In the area of industrial products, covered under Non-agricultural Market Access Negotiations, our concerns were mainly focused on the twin issues of protection to the sensitive items, and to the nature of the sectoral approach – whether voluntary or mandatory. The introduction of specific language in the Framework Agreement ensures that any decision that may be taken in the future will take care of our concerns. The negotiation on a formula in this sector could lead to more market access for us in developed countries by bringing down peak tariffs and reducing tariff escalations in products of export interest to India, such as textiles and leather. The Framework, while providing for less than full reciprocity in tariff reduction commitments, also envisages additional flexibility in the treatment of some of the tariff lines, through either no cuts or through reduced cuts.
7. In the negotiations on Services we have an offensive agenda, and in the Framework Agreement it was possible to incorporate specifically an area of major interest to us namely, Mode 4, (i.e. movement of natural persons). The Agreement envisages furnishing high quality offers in sectors and modes of supply of interest to developing countries to be made in a time-bound manner.
8. The Framework Agreement has also made a firm commitment to addressing the specifically development-related issues like Implementation Issues and operationalisation of Special and Differential Treatment provisions on a time bound basis.
9. One of our significant achievements in the Framework Agreement is the removal of three of the four Singapore issues on which we had objections – namely Investment, Procurement & Competition. The fourth issue, Trade Facilitation, which continues to be on the agenda, is an area of special interest to us since what may be expected from this negotiation would be a continuation of our autonomous reform process in this area. Trade facilitation essentially means simplification & transparency in customs procedures, cutting down on transaction costs etc. Reform in the customs procedures of other countries as well and an effective cooperation mechanism between customs administrations would greatly benefit our exporters.
10. The Framework Agreement is the first major stage towards conclusion of the Doha Work Programme, since it lays down the principles and criteria. The next step would be finalization of modalities, including formulae for reduction in tariffs and domestic support, setting the actual date for elimination of export subsidies for agricultural products and giving shape and meaning to the various special provisions we have managed to incorporate in the Agreement.
11. We have been helped to a large extent by our ability to develop and maintain issue-based alliances with like minded countries. The G-20 alliance on Agriculture stayed together and met frequently to decide on the strategy. On Singapore Issues a significant role was played by the G-16. On the issue of Special Products the Group of 33 was our firm ally. We also made special efforts to develop common grounds on a number of issues with the G-90 countries, consisting of ACP countries and LDCs. The Five Interested Parties (FIPs) consisting of India, US, EU, Australia and Brazil played perhaps the most pivotal role in evolving consensus on the Framework in Agriculture. We are committed to continuing to work in close cooperation with other WTO Members and groupings on issues of interest to us in the next stage of negotiations.
12. We attach due importance to the smooth functioning of the multilateral trading system. We are determined to ensure that, as negotiations proceed based on the Framework that has been recently agreed upon, our core concerns continue to be adequately addressed. Our approach to the negotiations will be dictated by our national interests, especially our concerns for the millions of farmers who are dependent for their livelihood on agriculture, as also our objective of stimulating economic activity through export of our Goods & Services. We are determined to pursue our interests in this and other areas vigorously.
Thank you".
**
SB/PM/MRS
Press Information Bureau
Government of India
***
New Delhi: August 13, 2004
The introduction of the Product Patent regime in India on 1st January 2005 as mandated by the WTO and TRIPS regime need not be adverse to the cause of public health and the viability of the Indian Pharma industry as is perceived. These were some of the observations made by academic experts, industry players and policy professionals at a session hosted by the United Nations Conference Trade and Development (UNCTAD) at the commencement of the "Conference on Global Pharmaceuticals, Biotechnology and Health in the 21st Century: Challenges and Opportunities for India" organised by the Indian Pharmaceutical Association (IPA) and the Institute for Strategic Biotechnology, Health and Training (ISBHT) which held in Mumbai recently (6-8 August).
Participants felt that Public Health concerns in the Patent new regime would need to be addressed at the policy level. It was important that the government utilise all the policy spaces (like compulsory licensing) provided by TRIPS to ensure that the patent regime did not conflict with concerns of public health. It was stressed that given the prohibitive costs of Research and Development for new drugs, proactive partnerships between government, industry and civil society were needed to discover new and potent drugs against malaria, TB, AIDS and other forms of disease that affected the poor. However, recent trends indicate that life style related diseases are becoming as important in India as communicable diseases. Hence, the focus on investment for R&D in such diseases is also expected.
Experts felt that the coming of the Product Patent Regime would pose challenges for the Indian Pharma industry but not undermine its essential strengths. The Indian Pharma industry was in a position to accelerate its growth in the increasingly large global generics market on account of its high skill in process engineering and extremely low costs of production. It was pointed out that already companies such as Dr. Reddy’s and Ranbaxy had over 50% of their sales in the export market. Further the generics market was also set to expand with patented drugs with annual sales of $70 billion going generic in 2007 – Indian generic companies could thus continue to grow at phenomenal rates. Cost competitiveness is also leading MNCs to outsource manufacturing.
While Participants acknowledged that R&D costs pose challenges to Indian companies to develop their own drugs, India had an excellent base in basic biochemical process expertise which is a prerequisite for all forms drug development. There was every reason that given time and adequate support the Indian pharma industry had the capability of developing its capabilities in reverse engineering to product discovery research. The US rates it number 2 only after itself, in terms of R&D capacity. India is in the developing world has filed that largest number of patents.
India could fill up the increasing shortage of technical manpower in countries such as, the USA, which is projected to have a shortfall of 12,000 pharma investigators in 2005. India also had the advantage of low clinical trial costs and easy availability of patients for clinical trials – a strong note of caution was, however, sounded on the need to ensure that the utmost standards of ethics and safety for patients were maintained during clinical trials.
Indian industry will have to use a combination of strategies to take advantage of the Product Patent Regime. While some firms would focus on generics, some would be on the cutting edge of research. Given that research costs in India are roughly one tenth that of that in the US, R&D outsourcing may be a real possibility.
************
SB/PM/MRS
Press Information
Bureau
Government of India
***
INDIA MUST USE
FTAs TO ITS ADVANTAGE: KAMAL NATH
MEETING OF THE INDO-AMERICAN CHAMBER OF COMMERCE
New Delhi: August 13, 2004
Shri Kamal Nath, Union Minister of Commerce & Industry, has said that India must use Free Trade Agreements (FTAs) to its advantage. Addressing the Indo-American Chamber of Commerce here today, Shri Kamal Nath said: "It is a recognised fact that progressive liberalisation in the bilateral and regional spheres builds the necessary confidence in our domestic industries and makes them globally competitive. Of course, at every step government will be in close contact with industry on these matters. FTAs may be signed by governments, but it is businesses and industries that give them life. An FTA that is not ‘owned’ by industry is not worth the paper it is written on".
Speaking on the subject of "FTAs: Is this an engine for growth?", Shri Kamal Nath noted that there were reportedly some 200 Regional Trade Agreements (RTAs) existing in the world and more than half of the world trade today took place within some RTA or the other and nearly every country in the world was a member of one or more RTAs. "As far as India is concerned, we have always stood for an open, equitable, practicable, non-discriminatory and rule-based international trading system. It is our belief that our endeavours at creating regional economic spaces are not derogatory to the creation of uniform economic space at the multilateral level. It is also a fact that RTAs consolidate peace and regional security, and also confer greater bargaining power in multilateral negotiations by tying in partner countries through regional commitments. With the above objectives in mind, India has engaged in a number of bilateral and regional initiatives", he explained.
"Whether an FTA can act as an engine for growth or otherwise would depend on the various features and contours of such an agreement. There is no ideal ‘type’ of FTA. FTAs have to be country-specific and grouping-specific. For example, an FTA between India and a county ‘X’ would not necessarily be the same if country ‘Y’ also wants to join. If the group changes, so do the dynamics", Shri Kamal Nath said.
Outlining the Preferential Trading Arrangements (PTAs)/FTAs that India had engaged in, Shri Kamal Nath said that the oldest PTA India had was the Bangkok Agreement, which is presently operational among, India, China, Bangladesh, Korea and Sri Lanka. Similarly, there is the SAARC Preferential Trading Arrangement (SAPTA) which is a PTA among the 7 SAARC countries signed 11 years ago. Efforts were now on to transform it into a full fledged FTA or SAFTA effective from 1st June, 2006 with tariff liberalisation programme being completed by 2013 for India, Pakistan and the Maldives; 2014 for Sri Lanka and 2016 for Bangladesh, Bhutan and Nepal. With neighbours like Bhutan and Nepal, India also has long standing free trade arrangements on a non-reciprocal, bilateral basis. India’s only full fledged FTA at present is the Indo-Sri Lanka which was extremely successful, the Minister said. He said: "We are currently negotiating comprehensive economic cooperation agreements with ASEAN and with Singapore, as also with MERCOSUR (a Spanish acronym for ‘Markets of the South’ – involving Brazil, Argentina, Uruguay and Paraguay). We are also talking to SACU – a grouping of five southern African countries led by South Africa. The Framework Agreement between Bangladesh, India Myanmar, Sri Lanka and Thailand is called BIMST-EC. It is visualised as a ‘bridging link’ between two major regional groupings i.e., ASEAN and SAARC. Very shortly, the Trade Minister of Thailand is coming to New Delhi. He and I shall be signing an Early Harvest Programme covering 82 tariff lines as the first step towards establishing a free trade area between India and Thailand".
On WTO, Shri Kamal Nath mentioned that the recently concluded Framework Agreement had laid down the principles and criteria for more detailed and specific modalities that had yet to be negotiated.
***********
Press Information Bureau
Government of India
*****
FLEXIBLE VISA REGIME TO INCREASE INDO-LIBYAN TRADE
New Delhi: August 13, 2004
The flexible visa regime between India and Libya will mitigate the problems being faced by the businessmen and will increase the bilateral trade between the two countries. The Libyan side has already prepared a draft agreement regarding the flexible visa regime, which could be signed during the forthcoming meeting of the Joint Commission after concurrence by the Indian side. The Bilateral Investment Promotion Agreement (BIPA) between the two countries is also expected to be signed during the forthcoming meeting. This was indicated in the agreed minutes of the preparatory meeting of 9th Session of Indo-Libyan Joint Commission, which were signed here last evening. The Indian side was led by Shri S. Jagadeesan, Joint Secretary in the Ministry of Commerce & Industry and the Libyan side was led by Mr. Jamal El-Barag, Director General of Foreign Office.
The two sides reiterated the commitment to significantly increase the bilateral trade, since it is much below the potential. For this to achieve, it was felt that institutional mechanism would be strengthened and transaction cost of trade has to be lowered. The Libyan leader informed the meeting about the changes taking place in Libya regarding the privatisation of industries and invited the Indian companies to invest in them.
Shri Jagadeesan said that Indian companies had expertise in sectors like Information Technology, Pharma, Biotechnology and Construction and added that these sectors would be key areas for cooperation. The meeting discussed the possibilities of cooperation in the areas of infrastructure, power, hydrocarbons, health etc. Both sides agreed to sign separate agreement for cooperation in the fields of science & technology and culture.
**************************
Press Information Bureau
Government of India
***
New Delhi: August 10, 2004
Shri Kamal Nath, Union Minister of Commerce & Industry, has said that India’s defensive interests in agriculture have been fully accommodated in the recent WTO Framework Agreement of 31st July, 2004, which lays the basis for further negotiations in the Doha Round of multilateral trade negotiations. "A huge gain for us at Geneva was a clear and unequivocal support on the part of developed countries to completely eliminate – not just to reduce, but eliminate - all export subsidies by a specific end date. Furthermore, we got them to commit to an across the board 20% reduction on trade distorting domestic support in the first year itself… On the other hand, the principle of special and differential treatment with regard to developing countries has been given primacy. We have ensured that not only will developing countries have access to Sensitive Products but over and above this we will have Special Products, and also a Special Safeguard Mechanism. We thus believe that we can adequately accommodate all our defensive interests in Agriculture", Shri Kamal Nath said while addressing the Seminar on "WTO’s July Framework Agreement" Implications for Indian Business" organised by Federation of Indian Chambers of Commerce & Industry (FICCI).
He reiterated that in agriculture "our main objective was to secure the interests of millions of farmers in our country. In India, we have subsistence farming, not commercial agriculture. In developed countries, huge subsidies amounting to more than 300 billion dollars a year are given by way of support to their farmers. This creates artificial prices. I have repeatedly said that the Indian farmer can compete with the US farmer, but not with the US Government!" Shri Kamal Nath said that by insisting on a tariff formula with deeper cuts in higher tariffs, India had, in fact, been able to open a window to market access to developed countries in agriculture for India’s own products. (This is because the developed countries have very high tariff levels for their sensitive products, whereas it is just the opposite in the case of India). "I am specifically keen on developing on agri export sector because I believe that this will contribute extensively to our agricultural development. Due to reduction of subsidies in developed countries, our agricultural products will be able to compete with products of other products of international markets", Shri Kamal said adding that the tariff rate quota (TRQ) expansion in developed countries would create another window opportunities for Indian agri exports. (NB: Tariff rate quota is a trading mechanism that provides for the application of a customs duty at a certain rate to imports of a particular good up to a specified quantity (in quota quantity), and at a different rate to imports of that good that exceed that quantity).
On Non-Agricultural Market Access (NAMA), Shri Kamal Nath said "The July Framework creates additional market access for our industries through provision for tariff reduction in non-agricultural merchandise goods. Tariff peaks and tariff escalations, which at present reduce our ability to export value added items, will now be specifically addressed".
Referring to the issue of Services, he said the July framework provided for improvement of quality of offers, since this is an area which functions on an "offers and request approach". The area of particular interest is Mode 4, in which "we see as a vehicle for getting better opportunities for our professionals abroad. We will now seek greater market access in Professional Services, Construction and Engineering Related Services, Computer Related Services, Medical Services, Audio Visual Services and Financial Services.
Shri Kamal Nath said that India strongly resisted -- and succeeded – in getting the issues of Investment, Procurement and Competition off the table. "This is not because we do not want to do anything in these areas, but because we do not want international interference in the formulation of our domestic policies in this regard. However, the fourth issue on Trade Facilitation is certainly to our benefit. Essentially, Trade Facilitation means improvement and transparency in customs procedures, cutting down on transaction costs. This not only means improvement in Indian Customs procedures, but also improvement in Customs procedures of other countries. Hassle-free customs is of fundamental importance if international trade is to flourish. We strongly believe that trade facilitation would ensure a greater participation in international trade by small and medium enterprises, reduce transaction costs (estimated to be between 6 to 10 per cent) and generally improve the prospects of developing countries in multi-lateral trade", he said.
***********
SB/PM/MRS
Press Information Bureau
Government of India
***
STEPS ANNOUNCED TO EASE CONGESTION AT JNPT
PRESS NOTE
The issue of congestion of containers at Jawaharlal Nehru Port (JNP) and Nhava Sheva International Container Terminal (NSICT) was discussed in a meeting chaired by Shri G.K. Pillai, Additional Secretary, Department of Commerce on 30th July 2004. Chairman JNPT, Deputy Chairperson/JNPT and representative of P&O Ports attended. Representatives of Department of Shipping, Central Board of Customs and Excise, Ministry of Railways, CONCOR, Federation of Indian Exporters Association, Northern India Shippers Association, Container Shipping Lines Association and Mumbai and Nhava Sheva Ship Agents Association were also present.
It was noted that the present congestion is largely due to the pendency of Heavy Metal Scrap (HMS) containers manifested for Dhandari Kalan ICD at Ludhiana. As on 30th July 2004, 3280 and 2100 such containers were pending at JNP and NSICT respectively and ICD Dhandari Kalan did not have the capacity to handle such a load within a short period of time. Moreover, the clearance of around 2000 HMS containers at ICD Dhandari Kalan was also very slow.
It has been decided that to mitigate the current problem no import of containers containing HMS will be accepted at JN Port / NSICT w.e.f. 15.9.2004. This restriction will be in effect for 60 days. CONCOR will run an average of 2.5 rakes daily from JNP for ICD, Dhandari Kalan, Ludhiana. In addition CONCOR will run 1 rake each from JN Port and NSICT daily for ICD, Dadri to evacuate the containers destined for ICD, Ludhiana. The containers taken to ICD, Dadri will be moved to ICD, Ludhiana by CONCOR subject to the availability of space at Ludhiana. The trade was requested to lift the containers blocking Dhandari Kalan ICD quickly to create space for containers lying at JN Port / NSICT.
It is expected that these decisions will ease the congestion at JN Port / NSICT within 30 days.
Department of Commerce,
Ministry of Commerce & Industry
New Delhi, Dated 6th August, 2004
*****************
SB/PM/MRS
Press Information Bureau
Government of India
***
PRICE SPECTRUM BAND FOR RUBBER, COFFEE AND TEA ANNOUNCED
New Delhi: August 04, 2004
The Price Stabilisation Fund Trust, Department of Commerce, has announced the Price Spectrum Band for the year 2003 for Rubber, Coffee and Tea. The Price Spectrum Band for each commodity has been calculated on the basis of Seven Years’ Moving average of International price for the commodity. Year 2003 has been categorised as Boom/Normal/Distress year for each commodity on the basis of the relationship of average annual Domestic Price to the Price Spectrum Band. Based on the above methodology, the year 2003 has been categorised as Boom year for Rubber, Distress Year for Coffee Robusta and Coffee Arabica and Normal year for Tea. As no tobacco grower was enrolled under the scheme during the year 2003-04, Price Spectrum Band for tobacco has not been fixed.
As per the Price Stabilisation Fund Scheme, the Price Stabilisation Fund Trust and/or the Members, who have been enrolled under the Scheme upto 31.3.2004, would make the following contribution to the Members’ saving bank account:
The Price Stabilisation Fund Trust would deposit Rs. 82.25 lakh for 8225 coffee member growers @ Rs. 1000/- each;
The Price Stabilisation Fund Trust would deposit Rs. 9.31 lakh for 1861 Tea Member growers @ Rs. 500/- each;
16240 Rubber Member growers would deposit Rs. 162.40 lakh @ Rs. 1000/- each and 1861 Tea Member growers would deposit Rs. 9.31 lakh @ Rs. 500/- each.
Since the year 2003 was a Distress Year for Coffee, each Coffee Member Grower may withdraw upto Rs. 1000/- from his Savings Bank account during 2004-05.
The Department of Commerce had launched the Price Stabilisation Fund Scheme in April 2003 for the benefit of growers of Tea, Coffee, Natural Rubber and Tobacco. The objective of the Price Stabilisation Fund Scheme is to provide financial relief to the growers when the prices of these commodities fall below a specified level.
The scheme is based on the principle of contribution from the growers and from the Government depending upon boom / normal / distress years, with a provision for withdrawal by the growers during the distress year. The contribution of the participant growers as well as that of the Government would be credited to the savings bank account of the participant growers opened for the purpose with any nationalized bank. The contribution of the participant grower / Government in the growers’ account and withdrawal therefrom would be decided with reference to the price spectrum band which would be fixed and announced every year.
*************
SB/PM/MRS
Press Information Bureau
Government of India
****
New Delhi: August 01, 2004
In a major victory at the WTO, India has secured significant gains and succeeded in fully protecting her interests in agriculture as well as in other key areas in the revised framework for negotiations which was adopted by the General Council of the World Trade Organisation (WTO) in Geneva on 31 July, 2004, to take the Doha process forward. The framework sets out the guidelines for further negotiations under the Doha Round of multilateral trade negotiations, encompassing the key areas of agriculture, non-agricultural market access, services and trade facilitation. Mr. Kamal Nath, Minister of Commerce and Industry, worked closely with the G-20 and other developing country groupings and led the Indian negotiating team during the crucial deliberations in Geneva culminating in the adoption of a framework that meets India’s key demands aimed at preserving the country’s domestic policy space by providing for Special Products; Special Safeguard Mechanism; and Special and Differential (S&D) Treatment in respect of market access in agriculture and the dropping of the three Singapore Issues relating to investment, competition policy and government procurement from the Doha agenda.
Mr. Kamal Nath also led the developing countries in successfully resisting a move to reduce the de minimis, which would have adversely affected subsistence and resource poor farmers in developing countries by bringing down even the minimal level of domestic support being given to them and consequently, the issue has been excluded from the agenda for further negotiations in the Doha round. The Minister repeatedly warned during the talks that apart from being a highly inequitous move, this was also a emotional issue for developing countries like India and could completely derail the talks for a framework.
India and other developing countries’ demand for acknowledgement of food security, livelihood security and rural development needs in all aspects of the WTO agriculture negotiations have been met. India’s long-standing demand (along with that of the G-33) for Special Products and a Special Safeguard Mechanism (SSM) in order to protect the interests of the farmers have been met with the framework agreement clearly stating that : " developing countries will have the flexibility to designate an appropriate number of products as Special Products (SP) and a Special Safeguard Mechanism (SSM) will be established for use by developing country members". SP refers to products of special sensitivity which would be exempt from tariff reduction commitments, while SSM is a mechanism which would enable the country to take safeguard measures against any surge in agricultural imports.
Acceptance of the concept of proportionality which would require lesser tariff reduction commitments from developing countries, a point repeatedly stressed by Mr. Kamal Nath at the deliberations in Geneva, is another major gain. The tiered or banded approach that has been accepted takes into account the fact that sensitivities of developing countries in agriculture such as their tariff structures are fundamentally different from that of the developed countries.
On domestic support, the framework provides that higher levels of trade-distorting domestic support will be subject to deeper cuts, thereby recognising the point made by India and the G-20 that the heavy subsidies given by developed countries were depressing world agricultural prices and hurting the interests of farmers in developing countries who could not compete with heavily subsidised farm goods in foreign and domestic markets. India and other developing countries have achieved reduction in domestic support by 20 % in the first year as a down payment which would effectively reduce the domestic support levels of developed countries. This has been one of the main demands of developing countries including India.
The creation of a blue box of domestic support, which was sought by the US to transfer some of their trade distorting support to this box, was strongly opposed by Mr. Kamal Nath and consequently, this was prevented in the revised draft which states that additional criteria would have to be negotiated before it is made operational. (The earlier July 16 draft had permitted creation of a new blue box, which would have gone against the Doha mandate of substantial reduction in trade distorting domestic support by developed countries). The existing blue box used by developed countries has also been tightened.
The initial draft of the framework agreement created and defined a category of sensitive products in agriculture in such away as to provide the European Union (EU) with a huge carve-out and effectively block all access to such products in the EU market. The Minister insisted on and succeeded in getting sensitive products re-defined so as to limit their number for the developed countries and to simultaneously provide for a proportionately large number of such products for developing countries.
The elimination of all forms of agricultural export subsidies by an end date will benefit farm exports from developing countries. In addition, India along with other developing countries has achieved extension of special and differential (S&D) treatment provisions for agriculture export subsidies even beyond the implementation period of the Doha Round.
Exclusion of three of the four Singapore issues from the Doha agenda marks a significant victory for India and other developing countries who have consistently opposed their inclusion in the WTO agenda as it would constrain their flexibility in important areas of domestic policy.
In the area of services , in which India has an offensive interest with its dynamic services sector growing exponentially, the framework provides that special attention will be given to sectors and modes of supply of export interest to developing countries especially in Mode 4. It also provides that members shall strive to ensure a high quality offers for liberalisation of services, particularly in sectors and modes of supply of export interest to developing countries.
The framework for negotiations on modalities for non-agricultural market access (NAMA) lays down that the formula approach for tariff reduction will fully take into account the special needs and interests of developing countries, including through less than full reciprocity in tariff reduction commitments. While reaffirming the importance of special and differential treatment as an integral part of the modalities for NAMA , it states that the negotiations will aim to reduce or as appropriate, eliminate tariffs, including reduction or elimination of tariff peaks, high tariffs and tariff escalations, as well as non-tariff barriers particularly, on products of export interest to developing countries. The negotiations will also address issues of flexibility for developing countries with regard to treatment of the presently unbound tariffs and the sectoral issues.
On Implementation Issues, the framework establishes a road map for resolving these long-pending issues by instructing the Trade Negotiations Committee (TNC) and other WTO bodies to redouble their efforts to find appropriate solutions as a priority, and the Director-General/WTO to continue consultations on all outstanding Implementation Issues under para 12 (b) of the Doha Ministerial Declaration, including issues relating to extension of the protection of geographical indications (GIs) under the TRIPS Agreement to products other than wines and spirits.
The negotiations on Trade Facilitation would aim at expediting the movement, release and clearance of goods and at provisions for effective cooperation between customs or other appropriate authorities on trade facilitation and customs compliance issues. Taking into account the principle of special and differential treatment for developing and least developed countries (LDCs) in the area of Trade Facilitation, the framework says that developing countries and the LDCs would not be obliged to undertake investments in infrastructure projects beyond their means.
***
SB/PM/MRS