RESTRICTED
WORLD TRADE G/STR/N/1/IND
31January 1996
ORGANIZATION(96-0366)
Original: English
STATE TRADING
Notification Pursuant toArticle XVII:4(a) oftheGATT 1994 and
Paragraph 1oftheUnderstanding ontheInterpretation ofArticle XVII
INDIA
Thefollowing communication, dated 15January 1996, hasbeenreceived fromthePermanent
Mission ofIndia.
__________________
Iamdirected torefer toWTO document G/STR/N/1 dated 13March 1995 onthesubject
mentioned above andtoforward herewith India'snotification pursuant toArticle XVII:4(a) ofthe
GATT 1994andParagraph 1oftheUnderstanding ontheInterpretation ofArticle XVII, forcirculation
among theMembers oftheWorking Party onState Trading Enterprises.G/STR/N/1/IND
Page2
1. Enumeration ofState Trading Enterprises
Information relating toState Trading enterprises which havebeengranted special privileges
bywayofmonopoly ornearmonopoly onexport orimport (canalizing agencies) isavailable inthe
Export &Import Policy (1April 1992 to31March 1997), asamended upuntil31March 1995.
Chapter XV-Part IIIandChapter XVI-Part IIIoftheExport-Import Policy book contain thelistof
items andenterprises designated forimports andexports ofthese items, respectively. Aconsolidated
listofcanalizing agencies andtheproducts withwhich theydealisgiven inAnnex 1.
Annex 1Acomprises oneMarketing Board which isengaged inpurchasing andselling and
thusfallswithin thescope ofnotification requirements.
2. Reason andpurposes forintroducing andmaintaining State Trading Enterprises
Ingeneral, theobjectives ofgranting monopoly onexport orimport ofcertain products are
thefollowing:
(a) obtain better terms oftrade through bulk transactions thanwould otherwise have been
possible;
(b) realize economies ofscale intrade operations;
(c) ensuring security ofsupplies through multiple contracts withdiverse sources;
(d) ability tohandle crisis situations effectively andprotect thecountry fromdisruptions insupply;
(e) optimal utilization ofcertain non-renewable national resources; and
(f) tohelptheexporters intribal areas ingetting remunerative prices fortheirexport products
(asinthecaseofniger seed) anddeveloping theirmarkets inasystematic manner.
3. Description ofthefunctioning ofthestate trading enterprises
- Theenterprises dealing withimports orexports orbotharelisted inChapter XV-
partIIIandChapter XVI-partIIIoftheExport andImport Policy, asalready indicated
against 1above. Details ofsuchenterprises areinAnnex I.
- Export orImport trade incanalized goods issubstantially reserved forthedesignated
agencies. However, theGovernment maygrant licences toprivate parties toimport
orexport anyofthese canalized goods.
- Inthecaseoffertilizers, crude oilandpetroleum products, availability offoreign
exchange isthemajor consideration indeciding thequantum ofimports. Import of
cereals andedible oilsisundertaken ontheadvice ofGovernment fromtimetotime.
Government isguided byanumber offactors including thebalance ofpayments and
domestic production andprices situation.
- Inthecaseofmineral andoreproducts, thequantities available forexport areliable
toberestricted from timetotimekeeping inviewthedomestic requirement aswell
astheneedtoconserve exhaustible natural resources. Keeping inviewthecomfortable
reserves position, there isnorestriction onthequantities tobeexported inthecase
ofmedium andlowgrade ironores. Inthecaseofonion andniger seeds, there isG/STR/N/1/IND
Page3
noquantitative ceiling forexports andexports oftheseitems aredetermined bymarket
forces. Inthecaseofpetroleum products, long-term contracts areentered intoand
thequantum isdecided taking intoaccount domestic supply conditions. There isno
restriction onthequantity ofmicatobeexported.
- Export prices aredetermined oncommercial considerations andbythedemand and
supply forces intheinternational market. Inthecaseofonions, Minimum Export Price
(MEP)isdeterminedfordifferentvarietieskeepinginviewthenationalandinternational
market intelligence, cropprospects, market trends, quality aspects, freight charges,
etc.Inthecaseofironore,prices arefixed onayearly basisastheexports takeplace
under long-term/annual contracts. Inthecaseofpetroleum products, imports/exports
areundertaken atmarket related prices. Asregards mark-up onimported products,
prices ofimported commodities arefixedonthebasisofactual costsincurred including
duties, warehousing costs, etc.,withanominal service charge forhandling these
operations.
- Long-term contracts areentered intobythecanalizing agencies inthecaseof
import/export ofpetroleum products andexport ofironore.Thecontracts areentered
intowithnational oilcompanies andthrough spottenders.
4. Statistical information
Theimports andexports ofcanalized items undertaken inthelastthree years areenclosed in
Annexes 2and3,respectively.
5. Reason whynoforeign trade hastaken place (ifthisisthecase) inproducts affected
Theconsiderations which determine thevolume ofimport orexport arealready explained in
reply toitemNo.III.Though theHindustan Vegetable OilsCorporation Ltd. hasbeendesignated
asacanalizing agency forimport ofcertain oilsandoilseeds, asindicated inAnnex I,ithasnotbeen
authorized byGovernment toimport anyofthese items sofar.Motor spirit andbitumen, although
canalized, were notimported during thelastthree years duetoadequate indigenous productions.
Similarly, export ofaviation turbine fuel,crude furnace oil,highspeed diesel, kerosene, liquified
petroleum gasandmotor spirit, although canalized, were notundertaken since these products were
either indeficit ornosurplus quantities wereavailable forexports. TheManganese OreIndia Ltd.
could notexport anyquantity ofmanganese oreduring thelastthreeyears duetodepressed international
market conditions. Also, theKerala Minerals andMetals Ltd. could notexport anyofthecanalized
mineral items during thelastthree years.
6. Additional information
Nil.ANNEX 1G/STR/N/1/IND
Page4
ListofCanalizing Agencies (State Trading Enterprises granted monopoly forimports orexports ofspecific products) andtheproducts forwhich theyare
Canalizing Agencies (asperApril 1992 -March 1997 Export andImport Policy amended upuntil31March 1995).
S1.
No.
(1)Canalizing Agency
(2)Nature oftrade
(3)Products/Group ofproducts canalized
(4)
1. Indian OilCorporation Ltd. Imports Petroleum products, namely, aviation turbine fuel,
crude oil,motor spirit, bitumen (asphalt) -paving
grade, furnace oil(except lowsulphur heavy
stock/low sulphur waxy residue) andhighspeed
diesel.
Exports Petroleum products, namely, aviation turbine fuel,
bitumen (asphalt) -paving grade, crude oil,furnace
oil,highspeed diesel, kerosene, liquified petroleum
gas(LPG), motor spirit, naphtha andrawpetroleum
coke.
2. Minerals andMetals Trading Corporation ofIndia Ltd. Imports Alltypes ofnitrogenous, phosphatic andpotassic
fertilizers, except Di-Ammonium Phosphate (DAP),
Muviate ofPotash (MOP), Mosco Ammonium
Phosphate (MAP), Sulphate ofPotash (SEP), NP
Fertilizers andNPK Fertilizers.
Exports Mica Waste (including factory cuttings) andscrap
which isobtained byprocessing micaandwhich
because ofsizeandcolour isconsidered below the
specification ofprocessed mica.G/STR/N/1/IND
Page5Ironoreexcepting (i)ironoreofGoaorigin when
exported toChina, Europe, Japan, South Korea and
Taiwan and(ii)ironoreofRediorigin toall
markets. Chrome orelumps withCr203not
exceeding 38percent.
Lowsilica friable/fine orewithCr203notexceeding
52percentandSilica exceeding 4percent.
Allgrades ofbauxite, except calcined bauxite and
lowgrade bauxite withalumina content Al203less
than64percentofwestcoast origin.
Manganese oresexcluding lumpy blended
Manganese orewithmore than46percent
Manganese.
3. Hindustan Vegetable OilsCorporation Ltd. Imports Coconut oil,RBO Palm oilandRBD Palm Stearin,
Seeds (Copra, Groundnut, Palm, Rapeseed,
Safflower, Soyabean, Sunflower, Cotton).
Allother non-edible oilsbutexcluding tung
oil/China wood oilandnatural essential oils;seeds
oranyother material from which oilcanbe
extracted notspecifically mentioned above or
elsewhere inthePolicy.
4. Food Corporation ofIndia Imports Cereals, excluding feedgrade maize forpoultry or
animals
5. TheTribal Cooperative Marketing Federation ofIndia Ltd. Exports Gum Karaya andNiger Seeds.
6. Mica Trading Corporation ofIndia Ltd. Exports Mica waste (including factory cuttings) andscrap
which isobtained byprocessing micaandwhich
because ofsizeandcolour isconsidered below the
specification ofprocessed mica.7. Indian RareEarths Ltd. Exports RareEarths (including Yttrium) Cres. Concentrates
andCompounds thereof, other minerals containing
thefollowing substances asaccessory ingredients
including:
a.Samarskite; and
b.Uraniferrous allanite: Radium oresand
concentrates.
Granular sillimanite produced bytheIndian Rare
Earths Ltd.
8. Karala Minerals andMetals Ltd. Exports Other minerals containing thefollowing substances
asaccessory ingredients including:
a.Samarskite; and
b.Uriniferous allanite: Radium oresand
concentrates.
Granular sillimanite produced bytheKerala Minerals
andMetals Ltd.
9. Manganese OreIndia Ltd. Exports Manganese oresexcluding lumpy blended
Manganese orewithmore than46percent
Manganese andproduced inthemines ofthe
Manganese OreIndia Ltd.
10. National Agricultural Cooperative Exports Marketing
Federation ofIndia Ltd.Exports Niger Seeds andOnions
11. National Dairy Development Board Exports Niger Seeds
Note: TheState Trading Corporation ofIndia Ltd., which wasamajor State Trading Enterprise doesnolonger dealwithanycanalized itemof
import/export.G/STR/N/1/IND
Page6G/STR/N/1/IND
Page7
ANNEX 1A
ListofMarketing Boards engaged inPurchasing andSelling
Name ofBoard
(1)Commodity dealtwith
(2)Nature ofactivity
(3)
Coffee Board Coffee Until 1992, under theCoffee Act,1942, all
coffee produced inthecountry wascompulsorily
pooled withtheCoffee Board forsaleand
disposal.
Since then, thecoffee marketing system has
beenliberalized. On13October 1992, an
Internal SaleQuota (ISQ) totheextent of
30percentofthecoffee produced wasgranted
tothecoffee growers under which theycould
sell30percentoftheirproduce indomestic
market.
After considering thedemand ofcoffee growers
forgrant ofFreeSaleQuota (FSQ) inplace of
theISQ,on14January 1994, itwasdecided to
grant FSQofcoffee inplace ofISQ,up
to50percentofthetotalproduce which was
permitted tobesoldbythecoffee growers either
internally orintheinternational market. The
responsibility ofreceiving theremaining
50percentofthetotalproduce continued to
repose withtheCoffee Board. With this
deregulation itbecame necessary fortheCoffee
Board toswitch from thedualauction system of
marketing toasingle auction system wherein
bothdomestic dealers andexporters bidfor
coffee attheprevailing international prices.
Thecoffee marketing system hasbeenfurther
liberalized withthedecision oftheGovernment
announced on22April 1995 under which
100percentFSQhasbeenallowed tosmall
growers withaholding sizeoflessthan10
hectares, and70percentFSQtoother coffee
growers. Coffee growers withaholding sizeof
10hectares andabove would havetopool
30percentoftheirproduce withtheBoard
which willbeusedbytheCoffee Board for
market intervention according totheneeds ofthe
situation.
Thiscoffee marketing system would ensure
liberalization ontheonehandandprovide fair
return totheproducers andrestrain undesirable
fluctuation ontheother.ANNEX 2G/STR/N/1/IND
Page8
Imports ofCanalized Items during 1992-1995
Quantity: 000tonnes
Value: RS.Crores
S1. Name ofitem 1992-1993 1993-1994 1994-1995
No. Qty. Value Qty. Value Qty. Value
1. Crude oil 27,247 10,685.36 30,822 10,688.52 27,319 10,316.03
2. Aviation Turbine Fuel - - - - 78 51.31
3. Furnace oil - - - - 267 91.62
4. High speed diesel 7,159 3,691.34 7,535 4,174.97 8,637 4,360.09
5. Urea 1,863 731.68 2,755 824.30 2,951 1,546.90
6. Cereals
a. Wheat 2,599 n.a. 476 n.a. - -
b. Rice 86 n.a. 56 n.a. - -
Note: Even though canalized, noimport ofmotor spirit andbitumen tookplace during thelastthreeyears. TheHindustan Vegetable OilsCorporation Ltd.,
eventhough acanalized agency forimport ofcertain oilsandoilseeds asindicated inAnnex 1,wasnotauthorized toimport anyofthese items during the
lastthree years. Also, since theStateTrading Corporation ofIndia (STC), thecanalizing agency forimport ofcertain oilsandoilseeds, doesnotdealwith
anyofthese canalized items, noinformation onthese items isincluded inthisstatement.ANNEX 3G/STR/N/1/IND
Page9Exports ofCanalized Items during 1992-1995
Quantity: 000tonnes
Value: RS.Crores
S1. Name ofitem 1992-1993 1993-1994 1994-1995*
No. Qty. Value Qty. Value Qty. Value
1. Petroleum products 3,719.00 1,606.78 4,034.00 1,508.81 3,254.00 1,587.38
2. Gum karaya 0.89 7.57 1.59 12.15 1.54 11.46
3. Mica waste andscrap 4.10 5.60 4.50 6.80 n.a. n.a.
4. Rareearths products 3.12 8.36 3.19 9.26 n.a. n.a.
5. Ironore 10,630.00 553.94 10,620.00 632.65 12,000.00 660.19
6. Manganese ore 223.00 33.49 249.00 31.05 417.00 46.53
7. Chrome ore 285.00 61.20 241.00 53.41 340.00 76.37
8. Niger seeds 16.614 n.a. 12.263 n.a. 8.188 n.a.
9. Onions 395.685 163.00 448.874 244.00 496.881 257.00
* Provisional
Note: Exports ofcrude oil,aviation turbine fuel,furnace oil,highspeed diesel, kerosene, liquified petroleum gasandmotor spirit, although canalized through
theIndian OilCorporation were either notundertaken orwere negligible since these products were either indeficit orhadnosurplus quantities available
forexports.