VITC

India is very competitive in agriculture. In fact, the noted economist Dr. Ashok Gulati after an extensive study of the issue has concluded that India should negotiate for a ceiling on tariff bindings on any agricultural commodity/product at no higher than 50% for any country.

Dr. Manmohan Singh in his budget speech for 1993-94 said: "Our strategy of gradually reducing the level of protection to Indian industry and integrating our economy with the world economy will clearly help Indian agriculture". Nevertheless, import duty on most agricultural items of interest to us has been generally pegged at 35%, which is the highest slab of customs duty in the current Budget (2000-2001).

After conducting successful negotiations with its trading partners, India has been able to raise the bound rates* of tariff on paddy and broken rice from zero to 80%; for milled or semi-milled rice from zero to 70%; skimmed milk powder from zero to 60%; millet from zero to 70%; maize seed from zero to 70% while other maize from zero to 60%; grain sorghum from zero to 80% and so on. The applied rates of duties have also been raised to the bound levels for most of the above items.

India has generally bound its tariffs on primary agricultural commodities at 100%; on processed items at 150% and on edible oils at 300%. India can raise its applied rates in case of any surge in imports. But import duties have to be calibrated keeping in mind domestic availability and also consumers’ interests.

As a matter of fact, duties have been revised upwards to safeguard the interests of the domestic industry time and again. For example, based on the representations from the domestic industry, the customs duty on sugar which was at zero duty till 27th April, 1998 has been raised upwards as follows:

From 28.4.98 to 13.1.99	5% + Rs.850 per MT of CVD*
From 14.1.99 to 27.2.99	20% + Rs.850 per MT of CVD
From 28.2.99 to 29.12.99	25% + 10% surcharge + Rs.850 per MT of CVD
From 30.12.99 to 7.2.2000	40% + Rs.850 per MT of CVD
From 8.2.2000 till date	60% + Rs.850 per MT of CVD

The basic customs duty on refined edible oils has been increased from 15% to 25% w.e.f. 30.12.99. A further 10% increase in basic customs duty has been effected from 12.6.2000.

Earlier, the duty was kept at a low level as there was some shortage of edible oil in the country and the Government wanted to protect the consumers from any surge in the domestic prices of edible oils. Thus, a happy balance between the interests of the consumers and of the domestic producers, is being maintained by Government by timely calibration of applied tariffs within the bound tariffs.

The basic customs duty on chicken legs and other products of chicken meat has been raised from 35% to 100% w.e.f. 12.5.2000.

* Bound rates are rates of customs duty "bound" or fixed at a certain level, beyond which the duty cannot be raised. Thus, these are ceilings on tariff rates.

To take care of domestic concerns the same WTO has given us the following weapons to meet with abnormal situations:
Provision in the WTO Agreement	Gist of the provision
1.Tariff protection	Applied tariff can be raised at any time provided they do not exceed bound rates
2.Article VI of GATT andAgreement on implementation of Article VI (Anti-dumping Agreement)	Anti-dumping duties can be imposed if a product is dumped in the importing country at less than its normal value provided it causes material injury to domestic industry.
3.Article VI of GATT and Agreement on Subsidies and Countervailing Measures (ASCM)	Countervailing duties can be imposed if a product is subsidised by the exporting country provided it causes material injury to domestic industry.
4.Article XIX of GATT and Agreement on Safeguards	Safeguard action (Imposition of duties or temporary QRs) can be taken when there is a surge in imports causing or threatening to cause serious injury to domestic industry. Bill to amend FTDR* Act to allow for QRs is being introduced.
5.Article XX of GATT	As a general exception, measures can be taken to protect human, animal or plant life or health; to protect public morals; conservation of exhaustible natural resources etc.
6.Article XXI of GATT	Measures can be taken under security exceptions.
7.Article XVIII: B of GATT	QRs can be imposed whenever BoP position deteriorates.