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

hotel <strong>and</strong> catering sectors. U.S. exports to <strong>India</strong> <strong>of</strong> fresh citrus have been inconsequential,
except in 2008 when <strong>India</strong> imported $1.3 million <strong>of</strong> fresh U.S. citrus, up from $220,000
in 2007. <strong>India</strong> mainly imports citrus from Australia during <strong>India</strong>’s <strong>of</strong>f-season <strong>of</strong> June
through October. <strong>India</strong> imports almost no fresh grapefruit or lemons. <strong>India</strong> also imports
$2–3 million annually <strong>of</strong> FCOJ mainly from Brazil <strong>and</strong> none from the United States.
High applied <strong>and</strong> bound tariffs are the principal barrier to U.S. exports <strong>of</strong> citrus products
to <strong>India</strong>. <strong>India</strong>’s bound rates range from 25 percent for fresh grapefruit to 100 percent for
fresh m<strong>and</strong>arins, <strong>and</strong> the rate is 85 percent for FCOJ. Applied rates are 25 percent for
fresh grapefruit, <strong>and</strong> 30 percent for most other fresh citrus products. However, the applied
rates could be legally raised to the higher bound rates. In addition, taxes <strong>of</strong> 2–4 percent
are routinely assessed on top <strong>of</strong> the tariff. Sunkist has limited information about <strong>India</strong>n
NTMs because the high tariffs already prevent most U.S. exports <strong>of</strong> fresh citrus to <strong>India</strong>.
Sunkist reported that it is concerned that in the WTO Doha Round, <strong>India</strong> will be
permitted to designate itself as a developing country, allowing <strong>India</strong> to reduce its tariffs
from the higher bound rates, rather than the lower applied rates. This would result in
minimal market access gains below <strong>India</strong>’s current applied tariff rates because under the
draft agricultural modalities, developing countries make smaller-tiered formula tariff
reductions than developed countries <strong>and</strong> these can be phased-in over a longer period <strong>of</strong>
10 years. As a developing country, <strong>India</strong> could also claim exemptions from tariff
reductions for designated “special” products <strong>and</strong> could temporarily impose special
safeguard mechanisms to reinstate higher tariffs on products it deemed sensitive.
U.S.-<strong>India</strong> Business Council 24
The U.S.-<strong>India</strong> Business Council (USIBC) is a business advocacy organization
representing U.S. <strong>and</strong> <strong>India</strong>n companies. The mission <strong>of</strong> the USIBC is to serve as a direct
link between business <strong>and</strong> government leaders focusing on increased trade <strong>and</strong>
investment between the two countries. The USIBC noted that <strong>India</strong>n domestic <strong>and</strong>
international agricultural policies, in response to severe food shortages, are focused on
food self-sufficiency, price stability for consumers, <strong>and</strong> adequate returns for farmers.
The USIBC stated that since the Green Revolution in the early 1960s, the <strong>India</strong>
agricultural sector has experienced dramatic output growth, making <strong>India</strong> one <strong>of</strong> the
world’s leading producers <strong>of</strong> agricultural products. However, the USIBC indicated that
recent performance in the sector has lagged, despite substantial economic growth in the
<strong>India</strong>n economy since the economic reforms <strong>of</strong> 1991. According to the USIBC, the
agricultural sector, which employs 70 percent <strong>of</strong> the country’s 1.1 billion people, has
suffered from structural deficiencies, including underinvestment, which has led to
poverty in the rural sector. The USIBC noted that the <strong>India</strong>n government has taken a
number <strong>of</strong> steps to improve the performance <strong>of</strong> the agricultural sector, including market
<strong>and</strong> regulatory reforms.
The USIBC indicated that <strong>India</strong>n agricultural tariffs <strong>and</strong> other border taxes remain at
levels that are not commercially viable for many foreign products. The association argued
that reducing tariffs would benefit <strong>India</strong>n consumers, producers, <strong>and</strong> the <strong>India</strong>n
government. The organization stated that reduced tariffs would allow foreign companies
to test the interest <strong>of</strong> their products to the <strong>India</strong>n market, which could lead to investment
in domestic production <strong>of</strong> those products. The USIBC also stated that <strong>India</strong>’s efforts to
24 U.S.-<strong>India</strong> Business Council, written submission to the USITC, June 26, 2009.
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