India: Effects of Tariffs and Nontariff Measures on U.S. ... - USITC

found that 39 percent <strong>of</strong> the rural population lacks access to an all-season road. 92
Planning documents for <strong>India</strong>’s Eleventh Five-Year Plan report that as <strong>of</strong> March 2007,
35 percent <strong>of</strong> villages were not yet connected by all-weather roads. The current plan calls
for all towns <strong>and</strong> villages <strong>of</strong> more than 1,000 to be connected by the end <strong>of</strong> 2009. 93
The efficiency <strong>of</strong> <strong>India</strong>n ports lags that <strong>of</strong> other major trading nations in Asia but is not
reported as a significant barrier to U.S. agricultural exports. When asked about major
barriers to imports, only two industry representatives mentioned that unloading at <strong>India</strong>n
ports was unusually slow, <strong>and</strong> neither reported that delays were caused by deficiencies in
port infrastructure. 94 Capacity <strong>and</strong> volume <strong>of</strong> traffic have increased significantly in recent
years, <strong>and</strong> planned expansions under the Eleventh Five-Year Plan will more than double
port capacity. 95 Between FY 2001/02 <strong>and</strong> FY 2006/07 average ship berth output (ASBO)
increased 76 percent, <strong>and</strong> average ship turnaround time (ASTA) declined 39 percent. 96
However, a report for the Confederation <strong>of</strong> <strong>India</strong>n Industry noted that in 2006, ASTA at
<strong>India</strong>n ports was approximately 20 times longer than in Singapore <strong>and</strong> that ASBO in
<strong>India</strong>n ports lags that <strong>of</strong> other major shipping nations. 97 Since FY 2006/07, ASBO has
improved but ASTA has worsened, both slightly. 98
<strong>Effects</strong> on U.S. Exports
Many <strong>of</strong> the inefficiencies that exist in the <strong>India</strong>n system do not disproportionately
disadvantage imports over domestic products. Transportation infrastructure, for example,
increases costs for all firms in <strong>India</strong>. The regulations imposed under the ECA restrict
domestic production as well as imports. The poor state <strong>of</strong> the electric power grid <strong>and</strong> the
high cost <strong>of</strong> electricity create problems for all firms with a presence in <strong>India</strong>. The absence
<strong>of</strong> an integrated market for intermediate goods <strong>and</strong> the lack <strong>of</strong> consistent water supplies
may increase costs on all agribusiness firms with production in <strong>India</strong>. 99
However, some characteristics <strong>of</strong> the <strong>India</strong>n marketing <strong>and</strong> distribution system do
adversely impact imports more than domestic products. Price volatility <strong>of</strong> some products
due to deficiencies in storage capacity, combined with the long <strong>and</strong> uncertain delays in
approving import licenses, can serve as a barrier to imports <strong>of</strong> agricultural
commodities. 100 Some imports may require storage <strong>and</strong> h<strong>and</strong>ling that is not readily
available in <strong>India</strong>.
Organized retailers <strong>and</strong> suppliers, both foreign <strong>and</strong> domestic, have some costs that are not
borne by their unorganized competitors. Current food safety regulations are unevenly
applied within the <strong>India</strong>n food distribution system. Organized retailers <strong>and</strong> suppliers are
forced to comply with regulations <strong>and</strong> bear the resultant costs but gain little in return. For
example, regulations specify that packaging for edible oils should not be reused.
92 World Bank, Rural Roads, 2007, 1; World Bank, World Development Report 2008, 322.
93 Government <strong>of</strong> <strong>India</strong>, Planning Commission, Eleventh Five Year Plan: 2007–12, vol. 3, 2008, 294.
94 Industry representatives, interviews by Commission staff, New Delhi, <strong>India</strong>, May 26, 2009, <strong>and</strong>
Mumbai, <strong>India</strong>, May 28, 2009.
95 Government <strong>of</strong> <strong>India</strong>, Ministry <strong>of</strong> Shipping, Road Transport <strong>and</strong> Highways, Report <strong>of</strong> the Working
Group for the Port Sector, March 2007, 19; Government <strong>of</strong> <strong>India</strong>, Planning Commission, Eleventh Five Year
Plan: 2007–12, vol. 3, 2008, 314, 318.
96
Government <strong>of</strong> <strong>India</strong>, Planning Commission, Eleventh Five Year Plan: 2007–12, vol. 3, 2008, 315.
97 Cygnus, “Background Note—Logistics,” September 2006, 5.
98 Government <strong>of</strong> <strong>India</strong>, Ministry <strong>of</strong> Finance, Economic Survey 2008–09, 244.
99 L<strong>and</strong>es, The Environment for Agricultural <strong>and</strong> Agribusiness Investment in <strong>India</strong>, July 2008, 17.
100 Industry representative, interview by Commission staff, New Delhi, <strong>India</strong>, June 4, 2009.
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