Abbreviation | Description |
BTP | Bio‑Technology Parks |
CIF | cost insurance freight |
DFIS | Duty-Free Imports for Exporters Scheme |
DSB | Dispute Settlement Body |
DSU | Understanding on Rules and Procedures Governing the Settlement of Disputes |
DTA | domestic tariff area |
EHTP | Electronics Hardware Technology Park |
EOU | Export Oriented Units |
EPCG | Export Promotion Capital Goods |
FOB | free on board |
FTP | Foreign Trade Policy |
GATT 1994 | General Agreement on Tariffs and Trade 1994 |
GNP | gross national product |
HBP | Handbook of procedures |
Highlights | Highlights of the Foreign Trade Policy 2015 2020 Mid Term Review (5 December 2017) |
IGST | Integrated Goods and Services Tax |
ITC | Indian Tariff Code |
MEIS | Merchandise Exports from India Scheme |
MSME | micro, small & medium enterprises |
Press Release | Release of the Mid Term Review of Foreign Trade Policy 2015-2020 – Annual Incentives Increased by 2% amounting to over Rs 8,000 crore for Labour Intensive/MSME sectors (5 December 2017) |
NFE | net foreign exchange |
SAE | statement of available evidence |
SCM Agreement | Agreement on Subsidies and Countervailing Measures |
SCM Committee | Committee on Subsidies and Countervailing Measures |
SEZ | Special Economic Zones |
SEZ Act | Special Economic Zones Act |
SEZ Rules | Special Economic Zones Rules |
STP | Software Technology Park |
Vienna Convention | Vienna Convention on the Law of Treaties, Done at Vienna, 23 May 1969, 1155 UNTS 331; 8 International Legal Materials 679 |
WTO | World Trade Organization |
To examine, in the light of the relevant provisions of the covered agreements cited by the parties to the dispute, the matter referred to the DSB by the United States in document WT/DS541/4 and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.4
Chairperson: Mr Jose Antonio S. Buencamino
Members: Ms Leora Blumberg
Mr Serge Pannatier
a. the Export Oriented Units (EOU) Scheme and Sector-Specific Schemes, including the Electronics Hardware Technology Parks (EHTP) Scheme and the Bio‑Technology Parks (BTP) Scheme (the EOU/EHTP/BTP Schemes);
b. the Merchandise Exports from India Scheme (MEIS);
c. the Export Promotion Capital Goods (EPCG) Scheme;
d. the Special Economic Zones (SEZ) Scheme; and
e. the Duty-Free Imports for Exporters Scheme (DFIS).
The prohibition of paragraph 1(a) of Article 3 shall not apply to:
(a) developing country Members referred to in Annex VII.
(b) other developing country Members for a period of eight years from the date of entry into force of the WTO Agreement, subject to compliance with the provisions in paragraph 4.55
The developing country Members not subject to the provisions of paragraph 1(a) of Article 3 under the terms of paragraph 2(a) of Article 27 are:
(a) Least-developed countries designated as such by the United Nations which are Members of the WTO.
(b) Each of the following developing countries which are Members of the WTO shall be subject to the provisions which are applicable to other developing country Members according to paragraph 2(b) of Article 27 when [gross national product] per capita has reached $1,000 per annum: Bolivia, Cameroon, Congo, Côte d'Ivoire, Dominican Republic, Egypt, Ghana, Guatemala, Guyana, India, Indonesia, Kenya, Morocco, Nicaragua, Nigeria, Pakistan, Philippines, Senegal, Sri Lanka and Zimbabwe.56
While context is a necessary element of an interpretative analysis under Article 31 of the Vienna Convention, its role and importance in an interpretative exercise depends on the clarity of the plain textual meaning of the treaty terms. If the meaning of treaty terms is difficult to discern, determining the ordinary meaning under Article 31 may require more reliance on the context and the object and purpose of the treaty and possibly other elements considered "together with the context" and the tools mentioned in Article 32.81
a. render the mandatory language of Annex VII(b) ineffective89; and
b. treat graduating Annex VII(b) Members differently from other developing country Members.90
[A]n expression in words of the facts at its disposal at the time it requests consultations in support of the conclusion that it has, in the words of Article 4.1, "reason to believe that a prohibited subsidy is being granted or maintained".123
a. the exemption of "every Developer and … entrepreneur" from customs duties on imports into, and exports from, "a Special Economic Zone or a Unit"243;
b. the exemption of "all goods … imported by a unit or a developer in the Special Economic Zone" from India's Integrated Goods and Services Tax (IGST)244; and
c. the deduction, from the corporate income tax base of an entrepreneur, of the export earnings of the entrepreneur's SEZ Unit.245
Table 1: Line items and Conditions in Notification No. 50/2017 challenged by the United States264
Line item | Duty-exempt goods265 | Condition |
104 | 36 items, or groups of items, used in the processing of sea-food, such as breadcrumbs, flavouring oil, food colours, citric acid, and milk protein | 10 |
229 | 27 items, or groups of items, for use in the manufacture of handicrafts, such as electric parts, hinges, animal hair materials for brushes, glass sheet, air and electric operated screw driver with hose and couplings, and moisture measuring tools | 21 |
288 | Lining and inter-lining materials for use in the manufacture of textile or leather garments | 28 |
312 | 42 items, or groups of items, for use in the manufacture of leather or synthetic footwear or other leather products, such as buckles, buttons and snap fasteners, elastic tape, lining, adhesives, heels, and fittings | 32 |
313 | 18 items, or groups of items, for use in the manufacture of handloom, cotton or man-made made-ups, such as lace, elastic tape, tassel, and sewing threads | 33 |
327 | Samples of hand knotted carpets | 36 |
430266 | 125 items, or groups of items, for use in the manufacture of commodities in the pharmaceutical and biotechnology sector, such as cell cultivation devices, low temperature freezers, spectrophotometers, centrifuges, x-ray diffraction equipment, automated sampling devices, and gas generators | 60(ii) |
431 | 119 items, or groups of items, for research and development in the agro-chemical sector, such as analytical balances, anemometers, centrifuges, dry ice makers, health monitoring equipment, and incubators | 61 |
612 | 21 items, or groups of items, for use in the manufacture of sports goods, such as butyl bladders for inflatable balls, cork bottoms, table tennis rubber, and stitching thread for inflatable balls or sports gloves | 101 |
The exemption or remission, in respect of the production and distribution of exported products, of indirect taxes in excess of those levied in respect of the production and distribution of like products when sold for domestic consumption.289
Inputs consumed in the production process are inputs physically incorporated, energy, fuels and oil used in the production process and catalysts which are consumed in the course of their use to obtain the exported product.298
Investigating authorities should treat inputs as physically incorporated if such inputs are used in the production process and are physically present in the product exported. The Members note that an input need not be present in the final product in the same form in which it entered the production process.299
Table 2: Steps in the Panel's analysis under footnote 1 and Annexes I(g), I(h), and I(i)
Footnote 1 | Annex I(g) | Annex I(h) | Annex I(i) | |
(1) | Exemption or remission | Exemption or remission, including (footnote 58) refund or rebate | Exemption, remission, or deferral, including (footnote 58) refund or rebate | Remission or drawback, including (footnote 58) full or partial exemption or deferral |
(2) | of duties or taxes | of indirect taxes (defined in footnote 58) | of prior‑stage cumulative indirect taxes (defined in footnote 58) | of import charges (defined in footnote 58) |
(3) | on an exported product | in respect of the production and distribution of exported products | on inputs that are consumed in the production of the exported product (defined in footnote 61; see also Annex II) | on imported inputs that are consumed in the production of the exported product (defined in footnote 61; see also Annex II) |
(4) | not in excess of the duties and taxes which have accrued | not in excess of those levied in respect of the production and distribution of like products when sold for domestic consumption | (not in excess of those) levied on those inputs301 | not in excess of those levied on those inputs (or on substitute inputs in case of substitution drawback, on which see Annex III)302 |
(1) a remission, drawback, exemption or deferral;
(2) of import charges;
(3) on imported inputs that are consumed in the production of the exported product;
(4) not in excess of those levied on those inputs.308
"Capital Goods" means any plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly, of goods or for rendering services, including those required for replacement, modernisation, technological up‑gradation or expansion. It includes packaging machinery and equipment, refrigeration equipment, power generating sets, machine tools, equipment and instruments for testing, research and development, quality and pollution control.320
Inputs consumed in the production process are [1] inputs physically incorporated, [2] energy, fuels and oil used in the production process and [3] catalysts which are consumed in the course of their use to obtain the exported product.325
Table 3: Link to production of exported products in Conditions 10, 21, 28, 32, 33, and 101
Condition | Link to production of exported product426 |
10 | "If,- (a) the goods are imported by an exporter of sea-food products for use in processing sea‑food products for export …" |
21 | "If,- (a) the goods are imported,- … for use in the manufacture of handicrafts for export …" |
28 | "If, (a) the goods are imported, … for use in the manufacture of textile garments or leather garments for export …" |
32 | "If (a) The goods are imported … for use in manufacture of [leather footwear or synthetic footwear or other leather products] for export …" |
33 | "If,- (a) the goods are imported … for use in the manufacture of [handloom made ups or cotton made-ups or man-made made ups] for export …" |
101 | "If,- (a) the goods are imported … for use in the manufacture of sports goods for export …" |
Under Annex I(g) –
(1) They constitute an exemption or remission, including a refund or rebate;
(2) of indirect taxes;
(3) in respect of the production and distribution of exported products;
(4) not in excess of those levied in respect of the production and distribution of like products when sold for domestic consumption.
Under Annex I(h) –
(1) They constitute an exemption, remission, or deferral, including a refund or rebate;
(2) of prior-stage cumulative indirect taxes;
(3) on inputs that are consumed in the production of the exported product;
(4) not in excess of those levied on those inputs.
Exports from India Schemes
3.00 Objective
The objective of schemes under this chapter is to provide rewards to exportersto offset infrastructural inefficiencies and associated costs.
…
Merchandise Exports from India Scheme (MEIS)
3.03 Objective
Objective of … MEIS is to promote the manufacture and export of notified goods/products.
(i) An EOU/EHTP/STP/BTP unit may import and/or procure, from DTA or bonded warehouses in DTA/international exhibition held in India, all types of goods, including capital goods, required for its activities, provided they are not prohibited items of import in the ITC (HS) subject to conditions given at para (ii) & (iii) below. …
(ii) The imports and/ or procurement from bonded warehouse in DTA or from international exhibition held in India shall be without payment of duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 and additional duty, if any, leviable thereon under Section 3(1), 3(3) and 3(5) of the said Customs Tariff Act. …
Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under [the Customs Tariff Act, 1975 (51 of 1975)], or any other law for the time being in force, on goods imported into, or exported from, India.507