India: Effects of Tariffs and Nontariff Measures on U.S. ... - USITC
India: Effects of Tariffs and Nontariff Measures on U.S. ... - USITC
India: Effects of Tariffs and Nontariff Measures on U.S. ... - USITC
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produced domestically. 60 Assessed primarily <strong>on</strong> manufactured goods, the additi<strong>on</strong>al duty<br />
applies <strong>on</strong>ly to certain agricultural products, such as malt, some starches, biscuits, some<br />
bakery products, custard powder <str<strong>on</strong>g>and</str<strong>on</strong>g> spices, s<str<strong>on</strong>g>of</str<strong>on</strong>g>t drink c<strong>on</strong>centrates, c<strong>on</strong>fecti<strong>on</strong>ery<br />
products, cocoa products, <str<strong>on</strong>g>and</str<strong>on</strong>g> certain vegetable oils. 61 The additi<strong>on</strong>al duty is levied <strong>on</strong> the<br />
c.i.f. value <str<strong>on</strong>g>of</str<strong>on</strong>g> the imported good, plus the applied tariff <str<strong>on</strong>g>and</str<strong>on</strong>g> certain other l<str<strong>on</strong>g>and</str<strong>on</strong>g>ing fees. 62<br />
During 2008 <str<strong>on</strong>g>and</str<strong>on</strong>g> early 2009, the central excise duty rate was reduced from 16 percent to<br />
8 percent in three different adjustments. 63 The reducti<strong>on</strong> <str<strong>on</strong>g>of</str<strong>on</strong>g> the excise duty not <strong>on</strong>ly<br />
lowers the additi<strong>on</strong>al duty but also the impact <str<strong>on</strong>g>of</str<strong>on</strong>g> the 4 percent special additi<strong>on</strong>al duty <strong>on</strong><br />
the price <str<strong>on</strong>g>of</str<strong>on</strong>g> imported goods (see below) because the special additi<strong>on</strong>al duty is applied to<br />
the aggregated total <str<strong>on</strong>g>of</str<strong>on</strong>g> all duties <str<strong>on</strong>g>and</str<strong>on</strong>g> the value <str<strong>on</strong>g>of</str<strong>on</strong>g> the imports. 64<br />
Additi<strong>on</strong>al Duty <str<strong>on</strong>g>of</str<strong>on</strong>g> Customs<br />
In the FY 2006/07 budget, <str<strong>on</strong>g>India</str<strong>on</strong>g> introduced a 4 percent additi<strong>on</strong>al duty <str<strong>on</strong>g>of</str<strong>on</strong>g> customs<br />
(special additi<strong>on</strong>al duty, or special countervailing duty) that applies to most imports,<br />
including many agricultural goods. 65 Some agricultural products are exempted from the<br />
special additi<strong>on</strong>al duty including staple food products such as pulses, fresh fruits <str<strong>on</strong>g>and</str<strong>on</strong>g><br />
vegetables, rice, wheat, <str<strong>on</strong>g>and</str<strong>on</strong>g> coarse grains. In some cases, the <str<strong>on</strong>g>India</str<strong>on</strong>g>n government uses the<br />
special additi<strong>on</strong>al duty to maintain price stability, exempting certain products from this<br />
duty to lower domestic market prices.<br />
The special additi<strong>on</strong>al duty is applied to the c.i.f. value <str<strong>on</strong>g>of</str<strong>on</strong>g> the imported product plus all<br />
applicable taxes, including the applied tariff <str<strong>on</strong>g>and</str<strong>on</strong>g> the additi<strong>on</strong>al duty described above. As<br />
a result, the effective rate <str<strong>on</strong>g>of</str<strong>on</strong>g> the special additi<strong>on</strong>al duty is greater than 4 percent. The<br />
special additi<strong>on</strong>al duty applies even to goods that have tariff rates equal to the bound rate,<br />
such as raisins <str<strong>on</strong>g>and</str<strong>on</strong>g> alm<strong>on</strong>ds. 66 A credit can be provided for the special additi<strong>on</strong>al duty for<br />
products that are also subject to the additi<strong>on</strong>al duty. 67 However, according to <strong>on</strong>e source,<br />
the refund generally takes at least 12 m<strong>on</strong>ths to receive <str<strong>on</strong>g>and</str<strong>on</strong>g> further adds to the short-term<br />
cost <str<strong>on</strong>g>of</str<strong>on</strong>g> importing goods. 68<br />
60 The <str<strong>on</strong>g>India</str<strong>on</strong>g>n government <str<strong>on</strong>g>of</str<strong>on</strong>g>ten refers to the “additi<strong>on</strong>al duty” as a countervailing duty. This term is not<br />
related to the WTO definiti<strong>on</strong> <str<strong>on</strong>g>of</str<strong>on</strong>g> a countervailing duty. Government <str<strong>on</strong>g>of</str<strong>on</strong>g> <str<strong>on</strong>g>India</str<strong>on</strong>g>, Customs Tariff Act, 1975, 4.<br />
Domestic producers are liable for the central excise duty as so<strong>on</strong> as the good is produced. Government <str<strong>on</strong>g>of</str<strong>on</strong>g><br />
<str<strong>on</strong>g>India</str<strong>on</strong>g>, Taxati<strong>on</strong>-Excise Duty.<br />
61 USDA, FAS, <str<strong>on</strong>g>India</str<strong>on</strong>g>-Agriculture Ec<strong>on</strong>omy <str<strong>on</strong>g>and</str<strong>on</strong>g> Policy Report, January 2009, 3; government <str<strong>on</strong>g>of</str<strong>on</strong>g>ficial,<br />
e-mail message to Commissi<strong>on</strong> staff, July 20, 2009.<br />
62 The c.i.f. value is the delivered value <str<strong>on</strong>g>of</str<strong>on</strong>g> the product which includes cost, insurance, <str<strong>on</strong>g>and</str<strong>on</strong>g> freight.<br />
Government <str<strong>on</strong>g>of</str<strong>on</strong>g> <str<strong>on</strong>g>India</str<strong>on</strong>g>, Taxati<strong>on</strong>-Types <str<strong>on</strong>g>of</str<strong>on</strong>g> Customs Duties. For certain products, the additi<strong>on</strong>al duty may be<br />
charged as a percentage <str<strong>on</strong>g>of</str<strong>on</strong>g> the <str<strong>on</strong>g>India</str<strong>on</strong>g>n government established maximum retail price. Importers <str<strong>on</strong>g>and</str<strong>on</strong>g> retailers<br />
are then required to print the maximum retail price <strong>on</strong> the product label. Industry representative, e-mail<br />
message to Commissi<strong>on</strong> staff, July 10, 2009.<br />
63 The central excise rate is not the rate applied to all goods. Some goods were previously charged<br />
4 percent or 8 percent, but those rates <strong>on</strong>ly apply to a limited number <str<strong>on</strong>g>of</str<strong>on</strong>g> commodities, <str<strong>on</strong>g>and</str<strong>on</strong>g> the rates have<br />
remained stable despite changes to the primary rate. In the FY 2008/09 budget, <str<strong>on</strong>g>India</str<strong>on</strong>g> initially lowered the rate<br />
from 16 percent to 14 percent. Later in December 2008, the central excise duty was again reduced from<br />
14 percent to 10 percent. The acting <str<strong>on</strong>g>India</str<strong>on</strong>g>n Minister <str<strong>on</strong>g>of</str<strong>on</strong>g> Finance, Shri Pranab Mukherjee, announced the final<br />
reducti<strong>on</strong> to 8 percent in February 2009 as part <str<strong>on</strong>g>of</str<strong>on</strong>g> an ec<strong>on</strong>omic stimulus plan.<br />
64 Government <str<strong>on</strong>g>of</str<strong>on</strong>g> <str<strong>on</strong>g>India</str<strong>on</strong>g>, Customs Tariff Act <str<strong>on</strong>g>of</str<strong>on</strong>g> 1975, 4.<br />
65 Government <str<strong>on</strong>g>of</str<strong>on</strong>g> <str<strong>on</strong>g>India</str<strong>on</strong>g>, Ministry <str<strong>on</strong>g>of</str<strong>on</strong>g> Finance, Central Board <str<strong>on</strong>g>of</str<strong>on</strong>g> Excise <str<strong>on</strong>g>and</str<strong>on</strong>g> Customs, Customs Tariff<br />
Notificati<strong>on</strong> No. 19/2006, March 1, 2006.<br />
66 Govindan, <str<strong>on</strong>g>India</str<strong>on</strong>g>: The <str<strong>on</strong>g>India</str<strong>on</strong>g>n Budget, March 1, 2006, 2.<br />
67 Government <str<strong>on</strong>g>of</str<strong>on</strong>g> <str<strong>on</strong>g>India</str<strong>on</strong>g>, Ministry <str<strong>on</strong>g>of</str<strong>on</strong>g> Finance, Uni<strong>on</strong> Budget, 2005, 1.<br />
68 Industry representative, e-mail message to Commissi<strong>on</strong> staff, June 10, 2009.<br />
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