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

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TABLE ES.1 <strong>India</strong>: Average bound <strong>and</strong> applied tariffs by selected product groups, as <strong>of</strong> April 2009 (percent) Product groups Bound tariff Applied tariff Vegetable fats <strong>and</strong> oils 227 24 Alcoholic beverages 150 133 Oilseeds 130 30 Grains 113 40 Processed fruits <strong>and</strong> vegetables 111 30 Fresh <strong>and</strong> dried fruits, vegetables, <strong>and</strong> nuts, excluding almonds 100 30 Sources: Government <strong>of</strong> <strong>India</strong>, Ministry <strong>of</strong> Finance, Central Board <strong>of</strong> Excise <strong>and</strong> Customs, Customs Tariff 2008/09; Government <strong>of</strong> <strong>India</strong>, Ministry <strong>of</strong> Finance, Central Board <strong>of</strong> Excise <strong>and</strong> Customs, various Notifications <strong>of</strong> Customs. Note: Averages are rounded to whole numbers. declined significantly from 113 percent in 1991, prior to <strong>India</strong>n economic liberalization, to approximately 34 percent in 2007, but they remain among the highest in the world. The wide gap between high WTO bound <strong>and</strong> lower applied tariff rates allows <strong>India</strong> to vary its rates frequently <strong>and</strong> substantially, which creates uncertainty for U.S. agricultural exporters. For many agricultural products, <strong>India</strong>’s WTO bound tariff levels are much higher than its applied rates. These gaps allow the <strong>India</strong>n government to modify its tariff rates in response to domestic <strong>and</strong> international market conditions. The <strong>India</strong>n government frequently changes its rates on heavily traded international commodities, such as wheat, rice, sugar, <strong>and</strong> vegetable oils, to mitigate food price inflation, depending on market conditions. If domestic agricultural prices rise, tariff rates are lowered to create downward pressure on those prices to minimize the impact on consumers; when prices fall, the rates are <strong>of</strong>ten increased to protect farmers by raising the overall cost <strong>of</strong> imports. This tariff rate variability <strong>and</strong> the complex notification process for announcing tariff-rate changes create uncertainty <strong>and</strong> are an additional impediment for U.S. agricultural exporters. A wide array <strong>of</strong> <strong>India</strong>n NTMs substantially limits or effectively prohibits certain U.S. agricultural exports. <strong>India</strong>n NTMs raise the cost <strong>of</strong> exporting U.S. agricultural products to <strong>India</strong> <strong>and</strong>, in some cases, effectively prohibit U.S. products from the <strong>India</strong>n market (table ES.2). <strong>India</strong> also links NTMs to domestic policies by relaxing NTMs when imports are required to alleviate food price inflation or food shortages. For example, certain phytosanitary requirements on key commodities such as wheat are reportedly adjusted by the <strong>India</strong>n government when imports are needed to control prices <strong>and</strong> adjust buffer stocks. <strong>India</strong>n Agricultural Imports <strong>India</strong>n agricultural imports are relatively small <strong>and</strong> concentrated in a few bulk commodities. <strong>India</strong>n agricultural imports accounted for just 1 percent <strong>of</strong> global agricultural trade in 2008 <strong>and</strong> supplied only 3 percent <strong>of</strong> <strong>India</strong>n agricultural dem<strong>and</strong>. The limited range <strong>of</strong> ii
TABLE ES.2 <strong>India</strong>: <strong>Nontariff</strong> measures facing certain U.S. agricultural exports, 2009 Measure Application Product Sanitary/phytosanitary measures Health st<strong>and</strong>ards Contamination st<strong>and</strong>ards Rules for genetically modified organisms Exceed internationally accepted st<strong>and</strong>ards Inconsistent with international practices Effectively ban imports because <strong>of</strong> burdensome approval process Poultry, swine, dairy Wheat, barley Corn, certain processed foods Fumigation requirements Require destructive or unavailable Pulses, certain fruits treatment processes Quality st<strong>and</strong>ards Exceed internationally accepted st<strong>and</strong>ards Certain processed foods, hides <strong>and</strong> skins, bovine semen Labeling <strong>and</strong> packaging rules Preclude agricultural product distribution Processed foods without m<strong>and</strong>ated disclosures Bans, monitoring, <strong>and</strong> licensing Place restrictions on free movement <strong>of</strong> Beef, poultry, edible oils, requirements imports cereals, nuts, corn State trading enterprises Restrict imports to certain state-sanctioned Food grains entities Customs procedures Notice <strong>and</strong> comment procedures Create uncertainty regarding paperwork <strong>and</strong> valuation Hinder information dissemination about rules affecting imports Corruption Raises costs through payment <strong>of</strong> bribes All Source: Compiled by Commission staff. All All <strong>India</strong>n agricultural imports tends to consist <strong>of</strong> staple foods, such as vegetable oils <strong>and</strong> pulses (peas, beans, <strong>and</strong> lentils), <strong>of</strong> which there is chronic undersupply from domestic production (table ES.3). In 2008, vegetable oils (mostly palm oil <strong>and</strong> soybean oil), pulses <strong>and</strong> nuts accounted for 60 percent <strong>of</strong> all <strong>India</strong>n agricultural imports. Notably, <strong>India</strong>n imports <strong>of</strong> food grains (excluding wheat), feed grains, oilseeds, meat, dairy products, sweeteners, <strong>and</strong> processed foods were negligible in 2008. <strong>India</strong> is self-sufficient in many <strong>of</strong> these products. TABLE ES.3 <strong>India</strong>: Agricultural imports at a glance United States World <strong>India</strong>n agricultural imports, 2008 $497 million $8,533 million <strong>India</strong>n agricultural import average annual growth, 2003–08 Top five <strong>India</strong>n agricultural imports, 2008 Top five <strong>India</strong>n agricultural suppliers, 2006–08 average Source: GTIS, World Trade Atlas Database (accessed June 8, 2009). a Not applicable Almonds, cotton, peas, apples, soybean oil 14.5% 12.7% Palm oil, soybean oil, peas, cashews, beans ( a ) Indonesia, Argentina, Burma, EU-27, Canada iii
Page 1 and 2: United States International Trade C
Page 3 and 4: U.S. International Trade Commission
Page 5: Abstract This report describes <str
Page 10 and 11: U.S. agricultural products face str
Page 12 and 13: U.S. Foreign Direct Investment U.S.
Page 15 and 16: CONTENTS Page Abstract ............
Page 17 and 18: CONTENTS―Continued Chapter 6 <str
Page 19 and 20: CONTENTS―Continued Figures 1.1. <
Page 21 and 22: ACRONYMS AND TERMS AAY Antodaya Ann
Page 23: ACRONYMS AND TERMS—Continued RGGV
Page 26 and 27: TABLE 1.1 India: A
Page 28 and 29: FIGURE 1.1 India:
Page 30 and 31: India’s central
Page 32 and 33: Despite their weak economic pr<stro
Page 34 and 35: Approach Current India</str
Page 36 and 37: Bibliography Birner, Regina, Surupt
Page 38 and 39: World Bank. Agriculture for Develop
Page 46 and 47: premium); (2) India</strong
Page 48 and 49: include government export restricti
Page 54 and 55: Exports by Major Trading Partner <s
Page 57 and 58: CHAPTER 3 Domestic Consumption Over
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TABLE 3.2 India: P
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more likely to have been exposed to
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BOX 3.3 Indian Con
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TABLE 3.3 India: T
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are expected to see income growth <
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Food Preferences India</str
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Regional Variation Geographic <stro
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CCC. “Know India
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CHAPTER 4 Indian A
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For most crops, however, In
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The Farm Sector soybeans 29 —but
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Food processing in India</s
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BOX 4.1 The Central Government’s
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BOX 4.2 Does the Minimum Support Pr
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August 3, 2009, New Delhi announced
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known as zamindars, have doubled or
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that the PFA Act was strictly enfor
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———. Bharat Nirman: A Time-Bo
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Organisation for Economic Co-operat
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CHAPTER 5 TARIFFS Overview
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sensitive. They include vegetable f
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wholly milled rice and</str
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The Indian governm
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India also reporte
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Reference Prices Reference prices,
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Landing Fees <stro
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Simulated Effects
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and nuts” by $0.
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5-19 TABLE 5.4 India</stron
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Bibliography Acharya, Keya. “Thor
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Indian Express.com
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CHAPTER 6 Nontariff</strong
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foreign sources. 6 For example, SPS
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BOX 6.1 Milk and M
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BOX 6.2 Wheat—Continued Yet, <str
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perpetuated continuously. The impor
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notices that must be integrated wit
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import corn under the TRQ is too bu
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Customs Procedures India</s
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Corruption Interests within <strong
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TABLE 6.2 India: E
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Bibliography American Apparel <stro
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Mattson, Jeremy W., Won, W. Koo, <s
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———. 2009 National Trade Esti
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TABLE 7.1 India: C
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First Point of Sal
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Private mandis Som
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approximately 65 million households
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7-10 TABLE 7.2 India</stron
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poor communications infrastructure
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limited popularity with farmers bec
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The lack of infras
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found that 39 percent of</s
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Bibliography Banerjee, A. Dairying
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Tiwari, Shri Rajendra Kumar. “Pos
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FDI Regulations and</strong
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TABLE 8.2 India: A
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Food Processing and</strong
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There is not necessarily a strong l
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For processing of
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BOX 8.3 Restrictions on Foreign Joi
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Under certain circumstances, FDI ca
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commenced. States tend to be quick
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Bibliography Bahn, Niti, an
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International Center for Alcohol Po
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Structure of the <
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BOX 9.1 The UPOV System for Plant V
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that the public sector in I
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Whether this situation will soon ch
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The U.S.-India Bus
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eggplant, which began field trials
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Maskus, Keith E. “Intellectual Pr
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APPENDIX A REQUEST LETTER
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The Honorable Sham L. Arano
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cprice-sewell on PRODPC61 with NOTI
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APPENDIX C HEARING WITNESSES
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ORGANIZATION AND WITNESS: Tuttle Ta
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Summary of Views <
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advertising and pr
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highest in the Asia-Pacific region.
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to U.S. exports to India</s
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transparent sanitary regulations th
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hotel and catering
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Western Pistachio Association 26 In
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APPENDIX E POTENTIAL FOR U.S. AGRIC
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E-4 TABLE E.1 India</strong
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Page 240 and 241:
Page 243:
APPENDIX F INDIAN AGRICULTURAL PROD
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TABLE F.1 India: A
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FIGURE F.1 India:
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is in nonirrigated areas with yield
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Consumption India
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efrigeration. This characteristic i
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70 percent of tota
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eportedly preferred in southern <st
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Cotton During MY 2003/04-2007/08, <
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Government of <str
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APPENDIX G UNION AND STATE/UNION TE
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certain agricultural goods in the p
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Bibliography Chaulan, Shri U.K. “
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Simulation Framework The effects <s
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Producers determine the optimal sup
Page 277 and 278:
Applied ad valorem tariff equivalen
Page 279 and 280:
We considered the possibility that
Page 281 and 282:
Estimation of <str
Page 283 and 284:
Bibliography Anderson, Kym, Mariann
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