Legal framework

Domestic legislation

What is the main domestic legislation as regards trade remedies?

Anti-dumping and countervailing duty investigations

The Customs Tariff Act 1975 (the Act) governs the conduct of anti-dumping (AD) (including anti-circumvention investigations), anti-subsidy and safeguard duty investigations, while the Foreign Trade (Development and Regulation) Act 1992 (the Foreign Trade Act) regulates safeguard measures in the nature of quantitative restrictions (QRs). See www.dgtr.gov.in.

The conduct and imposition of duty in AD and countervailing duty (CVD) investigations are governed by the Act and the specific rules promulgated respectively in this regard. Specifically, CVD investigations are regulated by section 9 of the Act read with the Customs Tariff (Identification, Assessment and Collection of Countervailing Duty on Subsidised Articles and for Determination of Injury) Rules 1995 (the CVD Rules), while AD investigations are regulated by section 9A of the Act read with the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles for Determination of Injury) Rules 1995 (the AD Rules) and Trade Notices as issued by the Directorate General of Trade Remedies (DGTR), which is the investigating authority functioning under the Department of Commerce, Government of India. Appeals against anti-dumping and countervailing duties are provided under section 9C of the Act and appeals in both cases are made before the Custom Excise and Service Tax Appellate Tribunal (CESTAT).

Safeguard duty investigations

In India, two types of safeguard investigations can be initiated: one that involves the levy of a duty and another that involves imposing QRs on imports. Further, safeguard duty investigations can either be in the nature of a general safeguard duty investigation, where the duties, once imposed, apply to imports from all countries (under section 8B of the Act), or a China-specific safeguard investigation (under section 8C of the Act) where duties are imposed on imports specifically from China. The latter is termed the Transitional Product-Specific Safeguard Investigation (China-specific safeguards).

The provisions under section 8B of the Act are implemented through the Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997 (Safeguard Rules), while the provisions under section 8C of the Act are implemented through Customs Tariff (Transitional Product Specific Safeguard Duty) Rules, 2002 (China Safeguard Rules).

Section 8C of the Act concerning China-specific safeguard investigations was enacted to give effect to article 16 of China’s Accession Protocol. The Accession Protocol, which came into effect on 11 December 2001, provides under article 16(9) that the China-specific safeguard mechanism would be terminated 12 years after the date of accession, which put the date of termination at 10 December 2013. However, neither section 8C of the Act nor the China Safeguard Rules contain an explicit sunset clause for the termination of the China-specific safeguard investigations. Nonetheless, despite the absence of an explicit reference to a sunset period, no new China-specific safeguard investigation has been initiated since 2013, indicating that the investigating authority is likely to refrain from initiating new China-specific safeguard investigations. The authority to conduct safeguard investigations lies with the DGTR.

On the issue of injury determination, it is pertinent to mention here that the standard of injury suffered by the domestic industry also varies in the two types of safeguard duty cases. In a general safeguard investigation, a demonstration of ‘serious injury’ or threat of ‘serious injury’ is required, while in a China-specific safeguard investigation the standard is one of market disruption or threat of market disruption.

The authority to impose QRs is provided under section 9A of the Foreign Trade Act, which states that the central government may impose QRs if imports have taken place in such increased quantities and under such conditions as to cause or threaten to cause serious injury to the domestic industry. The provisions of section 9A of the Foreign Trade Act are implemented through the Safeguard Measures (Quantitative Restrictions) Rules 2012 (Quantitative Restrictions Rules) (see www.dgft.gov.in). The functions of the authority conducting safeguard QR investigations were earlier discharged by the Directorate General of Foreign Trade (DGFT), but have now been transferred to the DGTR.

International agreements

In general terms what is your country’s attitude to international trade?

India, as one of the founding members of the GATT in 1947 and subsequently the WTO, supports liberalisation of international trade and believes that increased market access is imperative for the growth of developing countries. India is also a firm supporter of capacity building among developing and least-developed countries and is of the view that capacity building is imperative if these countries are to reap the benefits of liberalised trade. In terms of trade flows, while the US and EU have traditionally been India’s largest trading partners, in recent years India’s engagement with other developing countries has ensured that south-south trade is furthered. As of 2019, the US has regained its top spot as India’s largest trading partner, while China has fallen to the number two position.

India’s engagement in regional-trading or free-trading blocs is recent, even though the first regional trade agreement (RTA) entered into by India was in 1975, when India became a member of the Bangkok Agreement, which was renamed the Asia-Pacific Trade Agreement in 2005. The first free trade agreement (FTA) entered into by India was in 2000, when it entered into an FTA with Sri Lanka.

However, it is only in the past decade that India has entered into a significant number of FTAs, RTAs and comprehensive economic cooperation agreements (CECAs). As of April 2014, India has entered into 18 different agreements in the nature of FTAs, RTAs and CECAs. Prominent among them are the South Asian Free Trade Agreement; the India-Korea Comprehensive Economic Partnership Agreement (CEPA); the India-Singapore CECA; the India-ASEAN FTA; the India-Malaysia CECA; the India-Chile preferential trade agreement; and the India-Japan CEPA. India is currently negotiating FTAs with the European Free Trade Association, the EU, the South African Customs Union (SACU) and Bay of Bengal Initiative on Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). India is also engaged in negotiating a mega-regional FTA, known as the Regional Comprehensive Economic Partnership (RCEP), with the 10 member states of the Association of Southeast Asian Nations (ASEAN) and Australia, China, Japan, South Korea and New Zealand, which is likely to be concluded by the end of 2019.

India has been a responsible member of the WTO and this is reflected in its record of compliance with WTO decisions. India’s laws have been under scrutiny in notable cases such as India-Patents, India-Autos and India-Quantitative Restrictions. In all three cases, India complied with the decisions of the WTO by bringing its regime into compliance with the recommendations of the Dispute Settlement Body. Currently, the United States has challenged India’s compliance measure in India-Agricultural Products (DS430). The United States had requested retaliation under article 22.2 of the Dispute Settlement Understanding (DSU). India objected to the United States’ claim of retaliation, pursuant to which the parties pursued arbitration proceedings under article 22.6 of the DSU. Additionally, India initiated compliance proceedings under article 21.5 of the DSU, wherein it claimed that its compliance measures are in conformity with the recommendations and rulings of the Dispute Settlement Body. At the time of writing, both proceedings are ongoing.

Trade defence investigations (outside the WTO dispute settlement system)

Government authorities

Which authority or authorities conduct trade defence investigations and impose trade remedies in your jurisdiction?

In India, since May 2018, pursuant to a notification by the Government of India (Allocation of Business) 340th Amendment Rules, 2018, the Directorate General of Anti-Dumping and Allied Duties (DGAD) has been renamed the Directorate General of Trade Remedies (DGTR), vide Notification No. I-34(7)/2018-O&M dated 17 May 2018, which falls under the purview of the Department of Commerce. Consequently, the DGTR is now entrusted with conducting AD investigations (including anti-circumvention), CVD investigations and safeguard investigations.

The DGTR determines the injury and dumping or subsidisation in an AD or CVD investigation, respectively. The findings of the DGTR (preliminary and final findings) are recommendatory in nature and are given effect by the Department of Revenue of the Ministry of Finance by means of a customs notification (see commerce.gov.in).

The Department of Revenue has the discretion to accept, modify or even refuse the recommendations for the imposition of duty, if it deems it necessary. Hence, it is not unusual to find that in some cases, despite the DGTR recommending preliminary or final duty, the Department of Revenue does not issue a customs notification. It should be noted that there is no formal hearing procedure or opportunity for making further representations before the Department of Revenue.

With respect to safeguard duty investigations, the DGTR determines both a finding on increased imports and serious injury, as the case may be. The findings, whether preliminary or final, are recommendatory in nature and the same are given effect by the Department of Revenue by means of a customs notification.

Safeguard quantitative restrictions were introduced to the Foreign Trade Act in 2010 followed by the Quantitative Restrictions Rules in May 2012. According to the Quantitative Restrictions Rules, the authorised officer was entrusted with conducting the safeguard investigation and determining both the issues of increased imports and serious injury or threat of serious injury and recommending the extent and duration of QRs to be imposed. While the notification transferring the functions of the authorised officer to the DGTR was issued only in May 2018, no safeguard investigations concerning quantitative restrictions have been initiated by the DGTR to date.

India is a prolific user of trade remedies and among all the WTO members had initiated the highest number of trade remedial investigations up to 2017. According to the WTO data, up to December 2018, India had initiated 919 AD investigations, out of which 223 investigations were initiated against China, 68 against the Republic of Korea, 67 against the European Union, 64 against Chinese Taipei, 52 against Thailand, 39 against Japan and 41 against the US. India is followed by the US, which had initiated 694 anti-dumping investigations up to December 2018.

Similarly, India had, up to December 2017, initiated 43 safeguard duty investigations, which is the highest number of safeguard investigations initiated by any member to date. In terms of CVD investigations, however, the picture is quite different, where up to December 2017, India had initiated three CVD investigations, all against China. In stark contrast, the US had initiated 219 CVD investigations up to December 2017, which is the highest number of CVD investigations initiated by any member.

Complaint filing procedure

What is the procedure for domestic industry to start a trade remedies case in your jurisdiction? Can the regulator start an investigation ex officio?

An AD or CVD investigation can be initiated either upon the receipt of an application requesting initiation of the investigation or suo moto by the DGTR based on the information received from the commissioner of customs or any other source that provides sufficient evidence of dumping or subsidisation, material injury and causal link. If the AD or CVD investigation is initiated based on an application, then the applicant must meet the criterion of ‘domestic industry’ as provided in the AD or CVD Rules, which state that an application should be expressly supported by domestic producers who account for at least 25 per cent of the total production of the ‘like article’ or by domestic producers whose collective output constitutes more than 50 per cent of the total production of the ‘like article’ produced by that segment of the domestic industry expressing either support or opposition to the application. Typically, a trade association representing the domestic industry files the application on behalf of the industry seeking the duty. The application must also contain information on whether any particular domestic producer is related to an exporter or importer of the allegedly dumped or subsidised article or is itself an importer, in which case such a producer may be excluded from the group of domestic producers seeking to qualify as the domestic industry.

The application must contain evidence of dumping or subsidisation, material injury or threat of material injury and causal link. The evidence with respect to dumping is in the form of price-related data pertaining to the normal value in the exporting country and prices of the product when imported into India.

With respect to a CVD investigation, the evidence of subsidisation could be in the form of laws or regulations in the exporting country providing tax benefits, duty rebates, preferential loans or grants to the producer or exporter. In AD investigations, the domestic industry is also required to provide a significant amount of costing data relating to the product in question, such as data on cost of production, raw material consumption, consumption of utilities and allocation of expenditure, etc. The evidence with respect to injury is in the form of data on capacity, production, sales, selling price, price undercutting, price underselling, profits and losses, capacity utilisation, exports and export sales realisation etc.

The domestic industry submits confidential as well as non-confidential versions of the application to the DGTR, which then ensures that sufficient copies of the latter are kept in the public file to be made available to authorised interested parties upon inspection of the public file. The Act does not specify a time limit within which the DGTR has to initiate the AD or CVD investigation. However, the DGTR cannot initiate an investigation unless it is satisfied with the accuracy and adequacy of the evidence submitted as part of the application. Additionally, in the case of a CVD investigation, the DGTR cannot initiate the case unless it has held consultations with the government of the exporting country.

As stated above, India has introduced to the AD Rules provisions governing the conduct of anti-circumvention investigations. An applicant for an anti-circumvention investigation must establish the circumvention of existing AD duties, which can be said to occur in any of the following cases:

  • if an unfinished or unassembled product is imported to be completed or assembled in India or a third country and the value of the item after assembly is less than 35 per cent of the cost of the finished product;
  • if an article in altered form (either in description, name or composition) is imported from the country of export or origin; or
  • if producers or exporters subject to AD duty change their patterns or channels of trade without economic reason and so as to avoid the duty.

The applicant is also required to provide evidence that establishes that imports circumventing the duty are being dumped. As in the case of AD investigations, the DGTR conducts the investigation and recommends the duty to the Ministry of Finance, which may levy the duty retrospectively from the date of initiation of the investigation. An investigation pertaining to anti-circumvention may also be initiated suo moto by the DGTR.

Requirements in safeguard investigations

As in the case of an AD or CVD investigation, a general safeguard duty investigation and a QR investigation can be initiated either suo moto by the authority or upon receipt of an application requesting initiation of a safeguard investigation. If the investigations are initiated on the basis of an application, then the applicant must fulfil the eligibility criteria of a domestic industry. In this respect, unlike AD or CVD Rules, which expressly provide the percentage of support required for qualifying as the domestic industry, the Safeguard Duty Rules and the QR Rules only mention that the application should be filed by producers whose collective output of the like or directly competitive articles constitute a major share of the total production of the said article in India. In practice, the DGTR requires that the production of the applicant producers constitutes at least 50 per cent of the total production of the like or directly competitive article. The aforesaid interpretation of the DGTR, with respect to the standing of the domestic industry, is yet to be tested in QR investigations.

The domestic industry is required to provide prima facie evidence of increased imports, and serious injury or threat of serious injury in a general safeguard duty investigation and QR investigation. The causal link needs to be established in all cases. In all of the aforementioned investigations, the applicants are required to provide detailed import data (quantity and value) of the product under investigation for at least three years; factors attributable for increased imports and share of imports; and share of similar domestic products in the total domestic consumption or demand in India over a period of three years. The application must also provide the names and addresses of exporters or producers, importers, and any trade associations or user associations related to the product.

In general safeguard duty and QR investigations, the application must also provide a countrywide breakdown of the imports and their percentage of total imports and further provide an adjustment plan that details the efforts proposed to be taken by the domestic industry to make a positive adjustment to import competition.

Serious injury and threat thereof can be established by providing data on reduction in capacity or idling in capacity, sales volume, costs of production and impact of imports thereon, selling price, profits or losses, growing inventory and loss of employment. If the domestic industry has filed an application for AD or CVD duty or safeguard duty when petitioning for QRs, the same is required to be disclosed in the concerned application. Applicants are required to provide confidential and non-confidential versions of the application and access to the non-confidential version of the application is provided to all interested parties by placing it in the public file.

As in the case of AD or CVD investigations, the Safeguard Rules and the QR Rules also do not provide any time frame within which an investigation must be initiated. However, the concerned authority examines the accuracy and adequacy of the information provided in the petition and satisfies itself that there is sufficient evidence of increased imports, injury and causal link.

Contesting trade remedies

What is the procedure for foreign exporters to defend a trade remedies case in your jurisdiction?

In AD or CVD investigations, the domestic industry application expressly identifies the names and addresses of the exporters, importers and user industry that form the basis upon which the DGTR informs the known interested parties of the initiation. The DGTR informs such known individual exporters, importers, users and trade associations by sending a copy of the initiation notification and a copy of the non-confidential version of the application. The governments of the exporting country, through their embassies, are also provided with a copy of the initiation notification and the non-confidential version of the application.

All other parties not expressly identified in the petition are notified of the decision of initiation of the investigation by way of a public notice that contains information pertaining to the date of the initiation, the exporting countries and product involved, the basis of the allegation of dumping or subsidisation and summary of the injury factors, the time limits for submission of information, and the address to which the interested parties may direct their representations. Such interested parties are provided with the non-confidential version of the application upon a request in writing to the authority. Public notices are also published on the website of the DGTR (see www.dgtr.gov.in).

In the case of AD investigations, the DGTR stipulated in a Trade Notice in September 2018 that a party interested in participating in an investigation must notify its intent to participate within 40 days of publication of the notice of initiation. The time period for response may also be extended upon an application to the DGTR.

Interested parties are required to submit confidential and non-confidential versions of their submissions or questionnaire responses to the DGTR. During the course of the investigation, a public hearing is held where all the interested parties are allowed to present their views. However, views presented at the hearing are not taken into account by the DGTR unless submitted in writing, generally within five days of the hearing. If the interested participating parties incorporate confidential information in the written submission pursuant to the public hearing, a non-confidential version of the same is required to be forwarded to all the other participating interested parties. Parties are allowed to rebut the written submissions of the other parties; however, the rebuttal submissions are not exchanged between the parties and are submitted to the DGTR for its record and examination.

An AD or CVD investigation must be concluded within 12 months from the date of initiation of the investigation unless extended by another six months by the central government. The DGTR may make preliminary findings during the course of the investigation that become effective once approved by the Department of Revenue by means of a custom notification. The law is silent on the time period within which the Department of Revenue is required to give notice of the custom notification imposing the duty recommended in the preliminary findings. Once notice has been issued, an anti-dumping duty remains in force for a period not exceeding six months, which can be further extended to nine months by the central government. However, in no event can the preliminary duty be imposed before the expiry of 60 days from the date of the initiation notification. A countervailing duty, however, can only remain in force for four months and no extension can be granted.

The investigation concludes with the issuance of the final findings and the Department of Revenue has three months from the date of the final findings to issue the custom notification imposing the duty recommended by the DGTR in the final findings. As mentioned above, the Department of Revenue can confirm or modify the recommendations of the DGTR, if it deems necessary. If the custom notification is not issued within three months of the publication of the final findings, the recommendations lapse and the duty is not imposed. It should be noted that India follows the ‘lesser duty rule’ and imposes a duty that is the lesser of the margin of dumping and injury margin. Margin of injury is calculated as the difference between the non-injurious price (akin to a fair selling price) and the landed value of imports.

Safeguard investigations

As in the case of AD or CVD investigations, the authority in a safeguard investigation provides the known exporters, importers, users and the exporting country governments with a copy of the initiation notification and a copy of the non-confidential version of the application and usually requires these parties to respond to the allegations in the application and submit the respective questionnaires within the prescribed timelines. This time can be extended upon an application to the authority. Other parties are notified of the investigation by means of a public notice that details the date of the initiation, the exporting countries and product at issue, the volume of imports, the basis of the main allegation on increased imports and a summary of the injury factors, the time limits for submission of information and the address to which parties may direct their representations. Parties are expected to convey their intent to participate within 40 days of the initiation notification, pursuant to the Trade Notice issued by the DGTR in September 2018, upon which they are provided with a non-confidential version of the petition in order to submit a response to the allegations of injury and submit an exporter or importer questionnaire as the case may be. Extension may be provided upon an application made to the DGTR to that effect.

Safeguard investigations are mandated to be concluded within eight months from the date of initiation of the investigation unless extended by the central government. During this time, the authority holds a public hearing where views presented orally must be submitted in writing to be taken on record. Parties exchange post-hearing written submissions and are also provided with an opportunity to rebut the claims of the other parties. Rebuttal submissions, however, are not exchanged and are merely submitted to the DGTR.

Preliminary duties (QRs cannot be recommended on a provisional basis) may be recommended by the DGTR if ‘critical circumstances’ are established. As in the case of AD or CVD investigations, these findings of the DGTR are recommendatory in nature and are given effect by the Department of Revenue by means of a custom notification. In all cases of safeguard investigations, if the final duty or QR is recommended for more than a year, it must be progressively liberalised. The duty or QR in any event ceases to have effect on the expiry of four years from the date of its imposition, unless the central government is of the opinion that the duty or QR must continue, in which case it may be extended. However, under no circumstance can the duties or QRs be imposed beyond a period of 10 years from the date of the initial imposition.

WTO rules

Are the WTO rules on trade remedies applied in national law?

India’s trade remedy rules have been promulgated in accordance with the respective WTO-covered agreements. Under the Indian legal system, an international treaty does not take precedence over the domestic laws. However, in view of the fact that India is a member of the WTO and the Indian domestic trade remedy legislation is based on WTO agreements, the established jurisprudence in the form of WTO Panel and Appellate Body decisions is regularly cited by the Indian courts and holds a persuasive value in interpreting the rights and obligations of the interested parties in the investigations.

Furthermore, the AD Rules provide that a country will be treated as a non-market economy if it has been designated as such by the DGTR or by the competent authority of any other country during a three-year period preceding the initiation of the investigation.

Appeal

What is the appeal procedure for an unfavourable trade remedies decision? Is appeal available for all decisions? How likely is an appeal to succeed?

India’s trade remedy legislation contains provision for an appeal against an order regarding the existence, degree and effect of any subsidy or dumping. Section 9C of the Act provides that an appeal challenging the customs notification imposing AD, CVD or anti-circumvention duty and giving effect to the findings of the DGTR may be made to the CESTAT within 90 days from the date of issuance of the concerned notification.

Appeals against custom notifications levying general safeguard duty lie before a High Court in the form of a writ petition.

Review of duties/quotas

How and when can an affected party seek a review of the duty or quota? What is the procedure and time frame for obtaining a refund of overcharged duties? Can interest be claimed?

India’s trade remedy laws enable parties to seek reviews of the existent duties or quota.

In this respect, the Act and the AD and CVD Rules provide for a mid-term review investigation that can be initiated on the basis of an application by an interested party one year after the date of imposition of the duty. A mid-term review investigation may be requested on the grounds that one or more of the circumstances relevant to the imposition of duty have changed, requiring modification of duty, or that withdrawal of the anti-dumping duties is warranted because the grounds that need to be present for the continued imposition of duties no longer exist. Some of the factors that may be considered as ‘changed circumstances’ for a review investigation are:

  • change in non-injurious price of the domestic industry;
  • change in normal value of the exports;
  • change in export price of the exports;
  • change in landed values;
  • change in domestic production pattern;
  • change in legal status of the domestic producer or exporter; and
  • change in the condition of the domestic industry or producers.

Furthermore, the above-mentioned AD and CVD Rules also provide for sunset review investigations that can be initiated either suo moto by the designated authority or upon an application by the domestic industry. A review investigation, once initiated, must be completed within 12 months from the date of initiation of the investigation.

In respect of safeguard duty and QR investigations, the law imposes an obligation upon the authority to review the continued need for imposition of the safeguard duty or QR. If the duty or QR has been imposed for over three years, the law requires the concerned authority to review the situation no later than the mid-term of such imposition. Upon review, the authority may recommend withdrawal of the duty or QR, or the increased liberalisation of the duty or QR. The period for conclusion of a review investigation is eight months, which may be extended by the central government.

Refunds

In the case of AD duty, the Act and the AD Rules provide for refund of AD duties in two different circumstances: first, when the importer has paid AD duty in excess of the margin of dumping, and second, where the final duty is lower than the provisional duty. In the latter case, the importer must file an application for refund of the excess AD duty in accordance with the Customs Act 1962. If the application for refund of duty is not adjudicated within three months from the date of filing, the importer is entitled to interest at the rate notified by the central government.

In the former case, the importer must file an application before the DGTR establishing the fact that excess AD duty has been paid on certain imported goods. If the DGTR agrees with the applicant, the recommendation for refund of the differential duty paid by the importer will be forwarded to the central government, which will notify the amount of differential duty refundable to the importer. Pursuant to the said notification, the importer will file an application for refund of duty before the customs authorities at the port of import within three months from the date of notification, and the said application must be decided upon by the customs authorities within 90 days from the date of receipt of application. It is to be noted that unlike refund of excess duty paid in cases where the final duty is lower than the provisional duty, there is no provision for interest where the anti-dumping duty is refunded due to a difference in the dumping margin.

With regard to CVD, the Act provides for refund of CVD in cases where the final duty is lower than the provisional duty. In such cases, the importer must file an application for refund of excess CVD under the terms of the Customs Act, on which, if not adjudicated within three months from the date of filing, the importer is entitled to interest at the rate notified by the central government.

In respect of safeguard duty, the Safeguard Rules impose an obligation upon the DGTR to review the continued need for imposition of the safeguard duty. The said rules further provide for refund of safeguard duty where the final safeguard duty is lower than the provisional duty. In such cases, the importer must file an application for refund of excess duty paid in accordance with the Customs Act and if the refund application is not adjudicated within three months from the date of filing of the application, the importer shall be entitled to interest at the rate notified by the central government.

In respect of QRs, the Quantitative Restrictions Rules impose an obligation upon the DGTR to review the continued need for imposition of the QRs. Since the restriction is in the form of a quota, the issue of refund of duty and consequent interest liability does not arise.

Compliance strategies

What are the practical strategies for complying with an anti-dumping/countervailing/safeguard duty or quota?

The general strategy for complying with an AD, CVD, safeguard duty or QR is to seek review of the existing duty or quota or to challenge the duty or quota where necessary. Attempts are made frequently to re-source from other countries or to reformulate products. However, with the recently introduced provisions related to anti-circumvention investigations, any re-sourcing and reformulating could come under the purview of such investigations.

Customs duties

Normal rates and notification requirements

Where are normal customs duty rates for your jurisdiction listed? Is there an exemption for low-value shipments, if so, at what level? Is there a binding tariff information system or similar in place? Are there prior notification requirements for imports?

Normal customs duty rates are contained in the Customs Tariff Act, 1975 (the Act). The rate of duties published in the Act is the binding tariff and can be accessed at www.icegate.gov.in. Exports of goods through couriers or foreign post offices using e-commerce of FOB value up to 500,000 rupees per consignment shall be entitled for rewards under Merchandise Exports from India Scheme (MEIS). If the value of exports is more than 500,000 rupees per consignment then MEIS reward would be calculated on the basis of FOB value of 500,000 rupees only. Such goods can be exported in manual mode through the Foreign Post Offices at New Delhi, Mumbai and Chennai. The objective of MEIS is to offset the infrastructural inefficiencies and associated costs involved in the export of goods and products that are produced and manufactured in India.

There are no prior notification requirements for imports in general.

Special rates and preferential treatment

Where are special tariff rates, such as under free trade agreements or preferential tariffs, and countries that are given preference listed?

India does not provide for preferential tariffs under the Generalised System of Preferences (GSP).

India has entered into trade agreements with various countries, including Nepal, Chile, Singapore, Malaysia, Japan, Korea and Afghanistan, and is also party to various other PTAs and FTAs. The special tariff rates applicable under these preferential agreements are provided in the Act. Though the special tariff rates are published in the Act, the same are notified under section 25 of the Customs Act 1962. Once notified, the special tariff rates form part of the Act, and are placed at the end of the chapter in which the particular good is classified. See commerce.gov.in.

How can GSP treatment for a product be obtained or removed?

India does not grant preferential tariff rates under the GSP.

Is there a duty suspension regime in place? How can duty suspension be obtained?

Duty exemptions are generally provided by the central government in the larger public interest and such exemptions are notified under section 25 of the Customs Act 1962. Post-notification, the exemption becomes part of the tariff, and the published rate is applied on the import of such goods.

To obtain a duty exemption, the applicant must approach the Department of Revenue of the Ministry of Finance, and is required to substantiate with reasons the need for claiming the duty exemption. Only if the government is satisfied with the claims is the duty exemption notified. The notification pertaining to such exemption is placed before both Houses of Parliament and is notified subsequent to approval from both Houses of Parliament.

Challenge

Where can customs decisions be challenged in your jurisdiction? What are the procedures?

Customs decisions typically fall into the following categories, against which the challenge will be brought before the authorities mentioned in the respective category.

General customs matters

General customs matters are challenged before quasi-judicial authorities who have pecuniary jurisdiction over the subject matter of appeal. In matters involving customs duty up to 500,000 rupees, the Assistant Commissioner or Deputy Commissioner of Customs is the first adjudicating authority. Appeal against his or her decision is the responsibilty of the commissioner of customs (appeals) and then to the CESTAT. If the decision of the CESTAT relates to issues involving valuation or determination of duty then appeal would lie to the Supreme Court; and in all other cases the appeal lies to the High Court of the state where the customs decision has been rendered. In the latter cases, where appeal has been filed before the High Court, the High Court’s decision can be challenged before the Supreme Court.

In cases where the amount of duty involved is up to 5 million rupees, the decision can be challenged before the Additional Commissioner or Joint Commissioner of Customs. The said decision can be challenged before the Commissioner of Customs (Appeals). The order of the Commissioner of Customs (Appeals) can be challenged before the CESTAT and the CESTAT decision can be challenged before either the High Court or the Supreme Court based on the criteria mentioned above.

In cases where the duty amount involved is more than 5 million rupees, the decision can be challenged before the commissioner of customs (appeals). The decision of the commissioner of customs (appeals) can be challenged directly before CESTAT, and the CESTAT decision can be challenged before either the High Court or the Supreme Court based on the criteria mentioned above.

Matters relating to levy of anti-dumping and countervailing duty

As mentioned above, under section 9C of the Act, an appeal against the existence, degree and effect of any subsidy or dumping will lie before CESTAT. The decision of CESTAT can be challenged directly before the Supreme Court. Typically, an appeal is filed before CESTAT against the government’s notification levying an AD or anti-subsidy duty, which could either be against a provisional levy or the final levy. All other matters incidental to such notification, namely the recovery or refund of anti-dumping or anti-subsidy duty on imported goods, shall be considered as regular custom matters, and the appeal shall lie as in ‘General customs matters’ above.

Matters relating to levy of safeguard duty

The levy of a safeguard duty can be challenged directly before the High Court under a High Court’s writ jurisdiction.

Trade barriers

Government authorities

What government office handles complaints from domestic exporters against foreign trade barriers at the WTO or under other agreements?

The Department of Commerce, which is part of the Ministry of Commerce and Industry, handles complaints against trade barriers.

Complaint filing procedure

What is the procedure for filing a complaint against a foreign trade barrier?

No procedures have been laid down for filing a complaint against a foreign trade barrier. However, the government maintains a database of non-tariff trade barriers, typically in the nature of sanitary and phytosanitary measures and technical-barriers-to-trade measures in force in other countries against exports from India. If exporters are of the opinion that measures maintained by a member are adversely affecting India’s trade interests, usually the trade association representing the exporters brings the matter to the notice of the Ministry of Commerce, which may then decide to investigate the issue further and engage in bilateral discussions with the concerned member. In other cases, depending on the severity of the problem, the government may decide to initiate WTO dispute proceedings against the concerned member.

Grounds for investigation

What will the authority consider when deciding whether to begin an investigation?

See question 16.

Measures against foreign trade barriers

What measures outside the WTO may the authority unilaterally take against a foreign trade barrier? Are any such measures currently in force?

As a responsible member of the WTO, India refrains from taking unilateral measures to seek compliance from members maintaining trade barriers.

Private-sector support

What support does the government expect from the private sector to bring a WTO case?

Usually, WTO cases are supported by government funds and no formalised system exists for the private sector to support WTO litigation. Depending on the facts of the case, the private sector or trade association may make source studies and data available that may be required to support its case.

Notable non-tariff barriers

What notable trade barriers other than retaliatory measures does your country impose on imports?

Most imported goods fall under the open general licence category, which means that there is no requirement to obtain any kind of permit or licence to import such goods. However, where necessary, the government may require the obtaining of a permit or licence from the appropriate government authority before making imports. Examples of goods that require prior import licences are certain copper alloys, zinc waste and scrap, radio and television transmitters, communications jamming equipment etc. There are certain products that require a prior no-objection certificate, subsequent to which an import permit is issued by the DGFT. As an example, in the case of the import of certain telecoms equipment, the DGFT issues an import permit only if the importer has obtained a no-objection certificate from the Department of Telecommunications.

Indian Customs does not impose any import trade deposit requirements.

Export controls

General controls

What general controls are imposed on exports?

The Foreign Trade (Development and Regulation) Act 1992 (FTDR Act) empowers the government of India to formulate the export policy and to issue orders prohibiting, restricting or otherwise regulating the export of goods. As per the Foreign Trade Policy of India 2015-2020 (FTP), exports and imports shall be ‘free’ except when regulated by way of ‘prohibition’, ‘restriction’ or ‘exclusive trading through State Trading Enterprises (STEs)’ as laid down in the Indian Trade Classification (Harmonized System) (ITC (HS)) of Exports and Imports. The import and export policies for all goods are indicated against each item in the ITC (HS). Schedule 2 of the ITC (HS) lays down the Export Policy regime.

Goods that are classified as prohibited are not permitted to be exported. On the other hand, restricted items can be permitted for export only in accordance with an authorisation, permission or licence granted by the DGFT or in accordance with the procedure prescribed in a Notification/Public Notice issued by the government. Further, there are some items that are ‘free’ for export, but subject to conditions stipulated in other Acts or in law for the time being in force (Paragraph 2.01(b) of the FTP). Export of items that do not require any authorisation, permission or licence from the DGFT has been denoted as ‘Free’ under the ITC (HS), subject to the policy conditions contained, if any, under the relevant chapter heading or sub-heading or conditions stipulated in other acts or in law for the time being in force. Further, restrictions and prohibitions are applicable on export of certain classes of goods to specified countries. In addition to the prohibitions and restrictions prescribed in the FTDR Act, the FTP and Export Policy (Schedule 2 of ITC (HS)), export of goods are also subject to conditions stipulated in other acts or in law for the time being in force.

While exporting, an exporter must file a shipping bill with the customs authorities at the port declaring the description, nature and quantity of the goods under export. The said shipping bill must be accompanied by a packing list and invoice. Once the said documents are verified by the customs authorities, the goods may be exported.

While most products are not subject to an export duty, there are a few exceptions, such as coffee, tea, black pepper, sugar, iron ore and its concentrates, raw cotton, raw wool, specific jute items, and certain goods of iron or steel (tubes and pipes, bars and rods).

Government authorities

Which authorities handle the controls?

Levy and collection of customs duties, Integrated Goods and Service Tax and surcharge is undertaken by the customs officers appointed under the provisions of the Customs Act 1962. Documentation requirements necessary for the import and export of goods are also regulated under the Customs Act 1962 and rules framed thereunder and are verified by the customs officers at the port of import or export.

It should be noted that requirements pertaining to import licences, conditions on import or export, notification of restricted goods or prohibited goods for import and export etc are all regulated by the DGFT under the provisions of the FTDR Act read together with the Foreign Trade Policy 2015-2020.

Thus, controls with respect to documentation pertaining to import or export are regulated by Customs, while controls in relation to licensing and corresponding related documents are regulated by the DGFT.

Special controls

Are separate controls imposed on specific products? Is a licence required to export such products? Give details.

Separate controls are applicable to specific products, and exporters in such cases must obtain a permit in the form of an export licence from the DGFT before exporting these specific products. As an example, items falling into the category of special chemicals, organisms, materials, equipment and technologies (SCOMET) can be exported pursuant to the fulfilment of certain conditions. The conditions imposed on items falling under SCOMET require, among other things, that any export of SCOMET items shall be in compliance with the Weapons of Mass Destruction and their Delivery System (Prohibition of Unlawful Activities) Act 2005; units engaged in the export of SCOMET items need to obtain prior central government approval before foreign government representatives or foreign private parties make any site visits; and the application should be accompanied by an end-use certificate. Certain chemicals can be exported to countries that are party to the Chemical Weapons Convention and the DGFT may require a copy of the bill of entry evidencing shipment to the destination country within 30 days of delivery.

The controls for SCOMET items and the procedure for application are provided under the Foreign Trade Policy and the Handbook of Procedure (available at www.dgft.gov.in/).

Supply chain security

Has your jurisdiction implemented the WCO’s SAFE Framework of Standards? Does it have an AEO programme or similar?

India has implemented WCO’s SAFE Framework of Standards. The government of India notified the authorised economic operator (AEO) programme in India on 23 August 2011 (available at www.cbec.gov.in).

The said programme was implemented through Circular No. 37/2011-Cus dated 23 August 2011, wherein the procedure for securing AEO status is prescribed. Under the said circular, any importer or exporter can apply for AEO status provided the applicant has been financially solvent for three years prior to the year of application. The application must be accompanied by a process map, security plan, site plan and self-assessment form. Pursuant to the application, an AEO programme team will examine the applicant’s record of compliance for the past four years to ensure adherence to customs, central excise and service tax laws, as well as allied laws. In addition, the applicant should also have a satisfactory system of managing commercial and transport records, a mechanism for ensuring the safety and security of the business and supply chain and a proper mechanism for cargo, conveyance, premises and personnel safety. Once the application is considered to be valid on the above grounds, the application is sent to the AEO team for conducting a pre-certification audit at the applicant’s premises. Satisfaction with the above requirements leads to the granting of AEO status.

Applicable countries

Where is information on countries subject to export controls listed?

Restriction on exports to certain countries is provided under the Foreign Trade Policy 2015-2020 (available at www.dgft.gov.in), which is notified under section 5 of the Foreign Trade (Development and Regulation) Act 1992.

The notified countries are Iraq (prohibition on export of arms and related material), the Islamic State in Iraq and the Levant, also known as Daesh (trade in oil and refined oil products, modular refineries and related materials, besides items of cultural (including antiquities), scientific and religious importance is prohibited with the Islamic State in Iraq and the Levant), the Democratic People’s Republic of Korea (direct or indirect export of all items, materials, equipment, goods and technology that could contribute to Korea’s nuclear-related, ballistic missile-related or other weapons of mass destruction-related programmes, and luxury goods, including but not limited to items specified in Annex IV of UN Security Council Resolution 2094 (2013)), Iran (direct or indirect export to Iran or import from Iran of any items, materials, equipment, goods or technology mentioned in INFCIRC/254/Rev.9/Part I and INFCIRC/254/ Rev.7/Part 2 (IAEA Documents) as updated by the IAEA from time to time and S/2015/546 (UN Security Council document) as updated by the Security Council from time to time) and Somalia (direct or indirect import of charcoal is prohibited from Somalia).

Named persons and institutions

Does your jurisdiction have a scheme restricting or banning exports to named persons and institutions abroad? Give details.

There is no scheme under which controls are imposed on named persons and institutions.

Penalties

What are the possible penalties for violation of export controls?

The possible penalties include seizure and confiscation of goods, penalties on the exporter, and suspension or cancellation of the export licence.

Financial and other sanctions and trade embargoes

Government authorities

What government offices impose sanctions and embargoes?

India does not impose trade sanctions on any country, but regulates exports to certain countries as mentioned above.

Applicable countries

What countries are currently the subject of sanctions or embargoes by your country?

India does not impose trade embargoes on any country, but regulates exports of certain products to identified countries (commerce.nic.in).

Specific individuals and companies

Are individuals or specific companies subject to financial sanctions?

No, individuals or specific companies are not subject to financial sanctions.

Other relevant issues

Other trade remedies and controls

Describe any trade remedy measures, import or export controls not covered above that are particular to your jurisdiction.

All trade remedy measures are detailed above.

UPDATE & TRENDS

Recent developments

Are there any emerging trends or hot topics in trade and customs law and policy in your jurisdiction?What effects are Brexit, the withdrawal of the US from TPP, the slowdown of TTIP, RCEP; and negotiations of FTAs (such as the EU–Japan Free Trade Agreement) expected to have on your jurisdiction?

Key developments32 Are there any emerging trends or hot topics in trade and customs law and policy in your jurisdiction?

The government of India is exploring ways to enhance the competitiveness of the products manufactured in India for the emerging global trade scenario and to provide adequate support measures to domestic manufacturers. In this regard, the government has constituted two panels: a panel constituted of Special Economic Zones (SEZ) stakeholders to review India’s existing SEZ policy; and a High-Level Advisory Group on trade policy issues to make recommendations on pursuing opportunities, addressing challenges and finding a way forward amid emergent issues in the contemporary global trade scenario. Both panels have proposed extensive recommendations keeping in mind the extant international trade scenario and WTO framework. These recommendations are of immense importance in view of the recent challenge by the United States against India’s alleged export linked subsidies at the WTO.

Also, India is part of the ongoing negotiations in one of the mega-trade deals (RCEP). RCEP is the first regional trade agreement in which India is engaging in negotiations with countries such as China, Australia and New Zealand. The implications of RCEP will depend upon the obligations that would be undertaken; however, it is expected to provide significant opportunities for Indian manufacturers (for instance, new avenue for exports) and at the same time may pose a few potential challenges once the negotiations are concluded and the same comes into force.