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

Approach
Current <strong>India</strong>n agricultural trade policy is consistent with the government’s long-st<strong>and</strong>ing
attempts to strictly regulate trade to protect domestic producers from foreign competition
<strong>and</strong> consumers from global price fluctuations. 42 In short, <strong>India</strong>n agricultural trade policies
should be viewed in the context <strong>of</strong> <strong>India</strong>’s three core domestic policy objectives. The
<strong>India</strong>n government explicitly links tariffs to its domestic policies by stating that
agricultural import duties should be carefully calibrated with domestic support prices to
meet price stability goals. 43 Under <strong>India</strong>’s WTO obligations, agricultural tariffs are bound
at very high levels. 44 For many agricultural products, however, applied rates are much
lower than high bound levels, <strong>and</strong> this disparity allows the government to modify tariffs
to counter domestic <strong>and</strong> international market conditions. 45 In practice, the government
raises <strong>and</strong> lowers tariffs in response to changes in world commodity prices <strong>and</strong> domestic
supply <strong>and</strong> dem<strong>and</strong>. 46 <strong>India</strong> also appears to link NTMs to domestic policies by relaxing
NTMs when policymakers determine that imports are needed to relieve food price
inflation or food shortages. For example, the government has reportedly adjusted certain
phytosanitary requirements on key commodities (or eased their enforcement) to control
prices <strong>and</strong> adjust buffer stocks. 47
As requested by the Committee, this report contains qualitative <strong>and</strong> quantitative
information <strong>and</strong> analysis examining a broad range <strong>of</strong> trade, market, <strong>and</strong> regulatory factors,
including information on <strong>India</strong>n agricultural production <strong>and</strong> consumption, trade measures,
government regulations, <strong>and</strong> investment <strong>and</strong> IPR policies. The qualitative analysis
consists <strong>of</strong> two parts: (1) a general discussion <strong>and</strong> examination <strong>of</strong> <strong>India</strong>n policies <strong>and</strong>
their effect on U.S. agricultural exports <strong>and</strong> U.S. firms, <strong>and</strong> (2) case studies by product,
sector, or issue, in text boxes, to highlight the effect <strong>of</strong> specific <strong>India</strong>n tariff <strong>and</strong> NTM
policies <strong>and</strong> market conditions on U.S. agricultural products.
The descriptive information <strong>and</strong> data analyzed in this report were obtained from a variety
<strong>of</strong> sources, focusing on primary sources whenever possible. Commission staff sought
information from U.S. agricultural trade associations <strong>and</strong> U.S. firms with operations in
<strong>India</strong>, contacting more than 120 commodity- <strong>and</strong> sector-specific agricultural trade
associations <strong>and</strong> companies. Commission staff held extensive meetings with U.S.
government <strong>and</strong> private-sector <strong>of</strong>ficials, including the Office <strong>of</strong> the USTR; the USDA
Economic Research Service (ERS), Foreign Agricultural Service (FAS), <strong>and</strong> Animal <strong>and</strong>
Plant Health Inspection Service (APHIS); the USIBC; the Grocery Manufacturers
Association; <strong>and</strong> the American Farm Bureau Federation, as well as international
42 Government <strong>of</strong> <strong>India</strong>, Planning Commission, Eleventh Five Year Plan: 2007–12, vol. 3, 2008, 7, 15.
43 The government reportedly also uses certain nontariff measures in response to domestic market
conditions. For example, certain SPS requirements have been relaxed when <strong>India</strong> needs to import certain
commodities. Government <strong>of</strong>ficial, interview by Commission staff, New Delhi, <strong>India</strong>, June 2, 2009.
44 <strong>India</strong> was an active participant in the WTO Uruguay Round trade negotiations setting upper limits
(“binding”) on all agricultural tariffs, albeit at very high levels. By 2001, <strong>India</strong> eliminated all quantitative
restrictions on agricultural imports, consistent with its WTO commitments, but kept very high bound levels
on most products.
45 OECD, Agricultural Policies in Emerging Economies 2009, 95. <strong>India</strong>n wholesale market prices were
largely insulated from world price increases during the global rise <strong>of</strong> commodity prices in 2007–08. Ibid.,
101.
46 For example, when the domestic <strong>and</strong> international prices <strong>of</strong> wheat increased substantially in 2007,
<strong>India</strong> lowered tariffs to replenish depleted buffer stocks <strong>and</strong> moderate domestic prices, while at the same time
restricting exports. Support prices for wheat were increased, but set at prices below world prices.
47 Government <strong>of</strong>ficial, interview by Commission staff, New Delhi, <strong>India</strong>, June 2, 2009.
1-10