India's Trade Overview

EXPORT PROCEDURES AND DOCUMENTATION

NON-TARIFF MEASURES

The definition of NTMs encompasses all measures altering the conditions of international trade, including policies and regulations that restrict trade and those that facilitate it. NTMs are often incorrectly referred to as non-tariff barriers (NTBs). The difference is that NTMs comprise a wider set of measures than NTBs, which are now generally intended only as discriminatory non-tariff measures imposed by Governments to favour domestic over foreign suppliers. The cause of this confusion is because in the past most NTMs were largely in the form of quotas or voluntary export restraints. These measures are restrictive by design which explains why the word “barrier” was used. In present times, policy interventions take many more forms and therefore it is preferable to refer to them as “measures” instead of “barriers” to underline that the measure may not be necessarily welfare or trade reducing.

GUIDELINES ON NTBS FOR INDIAN EXPORTERS

In this section, we provide cases of countries considered as benchmarks for the most stringent measures in each field as indicated. These are general standards with Australia, EU, USA, Japan, China and Russian Federation as case examples

Australian NTBs applied globally on Frozen Bovine meat, boneless.

 Australia applies 118 NTMs on boneless bovine meat frozen, which has one of the highest standards of quality accepted.
 Out of these 118, 63 measures are export related, which is directly linked to quality assurance. SPS measures are 31 and 18 are TBT measures.

A. General requirements

• Unless otherwise expressly permitted by this Code, each word, statement, expression or design prescribed to be contained, written or set out in a label must, wherever occurring, be so contained, written or set out legibly and prominently such as to afford a distinct contrast to the background, and in the English language.
• Where a language other than English is used in addition to the English language on a label on a package of food or in association with a display of food, the information in that language must not negate or contradict the information on the label in the English language.
• Legibility requirements for warning statements, Unless otherwise prescribed in this Code, each word, statement, expression or design prescribed to be contained, written or set out in a warning statement on a label must, wherever occurring, be so contained, written or set out –
o in a size of type of not less than 3 mm; or
o in the case of a small package, in a size of type of not less than 1.5 mm. Editorial note

B. Labelling of genetically modified food

 The label on a package of genetically modified food must include the statement ‘genetically modified’ in conjunction with the name of that food or ingredient or processing aid.
 Additional labelling/information requirements notwithstanding, the provisions of this Division, Column 4 of the Schedule may specify labelling or other information requirements in relation to food produced using gene technology listed in Column 3 of the Schedule where –
o The genetic modification has resulted in one or more significant composition or nutritional parameters having values outside the normal range of values for existing counterpart food not produced using gene technology;
o The level of anti-nutritional factors or natural toxicants are significantly different in comparison to the existing counterpart food not produced using gene technology;
o The food produced using gene technology contains a new factor known to cause an allergic response in particular sections of the population;
o The intended use of the food produced using gene technology is different to the existing counterpart food not produced using gene technology; or
o The genetic modification raises significant ethical, cultural and religious concerns regarding the origin of the genetic material used in the genetic modification.
o The level of anti-nutritional factors or natural toxicants are significantly different in comparison to the existing counterpart food not produced using gene technology;
o The food produced using gene technology contains a new factor known to cause an allergic response in particular sections of the population;
o The intended use of the food produced using gene technology is different to the existing counterpart food not produced using gene technology; or
o The genetic modification raises significant ethical, cultural and religious concerns regarding the origin of the genetic material used in the genetic modification.

C. Mandatory fat declaration where a reference is made to fat content of minced meat

 Where express or implied reference is made in relation to the fat content of minced meat, the maximum proportion of fat in the minced meat, expressed in g/100g, must be –
o Declared on the label on package of the food; or
o where the food is not required to bear a label –
o Displayed on or in connection with the display of the food; or 
o Provided to the purchaser upon request

D. Maximum permissible limits for agricultural and veterinary chemical residues present in food

 Permission for articles and materials Articles and materials may be placed in contact with food, provided such articles or materials, if taken into the mouth, are not –
• Capable of being swallowed or of obstructing any alimentary or respiratory passage; and
• Otherwise likely to cause bodily harm, distress or discomfort.

E. Maximum levels of metal contaminants in food

 In this clause –
• Food means the food or class of foods listed.
• Metal contaminant means a substance listed.
• The maximum levels for metal contaminants in food are listed separately

F. Country of origin labelling for packaged food

 Sub clause (2) applies to food in a package. The food must be labelled with –
• A statement on the package that identifies the country where the food was made, produced or grown; or
• A statement on the package –
o That identifies the country where the food was manufactured or packaged; and
o To the effect that the food is constituted from ingredients imported into that country or from local and imported ingredients.
 However, Sub clause (4) applies to food in a package if –
• The food is unprocessed fruit and vegetables, whether whole or cut;
• The food is displayed for retail sale;
• The package does not obscure the nature or quality of the food.
• The food must be labelled with a statement on the package or in connection with the display of the package which –
o Identifies the country or countries of origin of the fruit and vegetables;
o Indicates that the fruit and vegetables are a mix of local and imported foods; or
o Indicates that the fruit and vegetables are a mix of imported foods.

G. Lot identification

 The label on a package of food must include its lot identification, unless the food is –
• An individual portion of ice cream or ice confection; or
• In small packages, and the bulk packages and the bulk container in which the food is stored or displayed for sale includes lot identification.

H. Name and address of supplier

 The label on a package of food must include the name and business address in Australia or New Zealand, of the supplier of the food.
 A vending machine from which food is sold must clearly display in a prominent place on, or in the vending machine, the name and business address in Australia or New Zealand, of the supplier of the food.
 The label on a hamper must include the name and business address in Australia or New Zealand, of the supplier of the food.

 The name under which the product is sold.
 The list of ingredients, in descending order of weight.
 The net quantity of prepackaged foodstuffs expressed in metric units (liter, centiliter, milliliter, kilogram or gram).
 The date of minimum durability: the shelf life is indicated by the words “Best before…” when the date includes an indication of the day or by “Best before end of…” in other cases
 The date has to be given in order of day-month-year
 Any special storage conditions or conditions of use.
 The name or business name and address of the manufacturer or packager
 Treatments undergone, with specific indications for irradiated foods and deep-frozen foods
 Labeling has to be in a language easily understood by consumers; this is in practice the official language(s) of the member state
 Country of origin labeling is mandatory
 Quick-frozen foodstuffs sold to the final consumer should carry the following additional labeling indications: the product name with the indication “quick-frozen”, the date of minimum shelf life, the period during which the purchaser may store the product, the storage temperature and/or type of storage equipment required, batch identification and a clear indication of the type “do not re-freeze after defrosting”. Irradiated foods or foods containing irradiated ingredients must be labeled “irradiated” or “treated with ionizing radiation”.

 Exporting facilities that manufacture, process, pack, or hold food must register with FDA biennially (every two years).
 Place all required label statements on the front label panel (the principal display panel or PDP), or,
 Place certain specified label statements on the PDP and other labeling on the information panel (the label panel immediately to the right of the PDP, as seen by the consumer facing the product).
 Place the statement of identity, or name of the food, and the net quantity statement, or amount of product, on the PDP and on the alternate PDP.
 Information label statements include the name and address of the manufacturer, packer or distributor, the ingredient list, nutrition labeling and any required allergy labeling
 For information panel labeling, use a print or type size that is prominent, conspicuous and easy to read. Use letters that are at least one-sixteenth (1/16) inch in height based on the lower case letter “o”. The letters must not be more than three times as high as they are wide, and the lettering must contrast sufficiently with the background so as to be easy to read. Do not crowd required labeling with artwork or non-required labeling.
 Food labels must list:
• Name and address of the manufacturer, packer or distributor. Unless the name given is the actual manufacturer, it must be accompanied by a qualifying phrase which states the firm’s relation to the product (e.g., “manufactured for “or “distributed by”);
• Street address if the firm name and address are not listed in a current city directory or telephone book;
• City or town;
• State (or country, if outside the United States); and
• ZIP code (or mailing code used in countries other than the United States)

 Alpha-numeric manufacturer’s identification (ID) code that corresponds to a specific production facility
 The product label must also contain one of the following: 1) customer service contact information, 2) company website address, or 3) names, addresses, and ID codes for all production facilities
 Contain the name and address of both the manufacturer and the distributor of a product
 Allergen Labeling: Not required for the identified products.
 Nutritional Labeling:
 Mandatory: Energy, Protein, Fat, Carbohydrate, Salt Equivalent
 Voluntary But Recommended: Saturated Fat, Dietary Fiber
 Voluntary: Available Carbohydrate, Sugars, Cholesterol, Vitamins and Minerals

 Labeling of prepackaged food for direct delivery to consumers shall include name of foods, list of ingredients, net weight and configuration, name of the food, address and contact information of manufacturers and/or distributors, date of manufacture and date of minimum durability, conditions for the storage, food production license number, code of the product standard and other contents needed to be labeled
 The specific name of the food shall be presented in the prominent place of the label, and shall clearly indicate the true nature of the food.
 The labeling of the prepackaged foods shall declare the list of ingredients.
 All ingredients shall be listed in descending order of their weights added in the process of manufacture or preparation of the food; those ingredients constituting less than 2% of the food may not be listed in descending China National Standard GB7718-2011 order.
 Where an ingredient is itself the product of two or more ingredients (except compound food additives), such a compound ingredient may be declared, as such, in the list of ingredients, provided that it is immediately accompanied by a list, in brackets, of its primary ingredients in descending order of proportion. Where a compound ingredient (for which a name has been established in a national, trade or provincial standard) constitutes less than 25% of the food, its primary ingredients need not be declared.
 The names of food additives shall be declared in general names in accordance with GB 2760 declaring the class name and international code of food additives
 Where the labeling of a food places special emphasis on the presence of or adding one or more valuable and/or characterizing ingredients or components, the percentage of the emphasized ingredients added at the time of manufacture or the content of the emphasized components shall be declared
 The net weight of the packaged food
 The minimum font size of net weight declaration shall be in accordance:
• Q ≤ 50 ml; Q ≤ 50g: 2mm
• 50 ml< Q ≤ 200 ml; 50 g < Q ≤ 200g: 3 mm
• 200 ml < Q ≤ 1L; 200 g < Q ≤ 1 kg: 4 mm
• Q> 1 kg; Q> 1 L: 6 mm
 The net weight and the name of the food shall be presented in the same display panel of the package (container).
 In the case of a solid food packed in a liquid medium, the solid food is the main ingredient, in addition to the declaration of net contents, the drained (solid) contents shall also be declared, in weight or percentage
 For prepackaged food containing small units of prepackaged food, in addition to the declaration of net weight, the configuration shall also be declared on the outer package, except for those the inner pack does not be sold as individual units, for example, bits of candies, packets of cookies, pouches of succade and so on.
 The country or region (Hong Kong, Macao or Taiwan) of origin, and the name, address and contact information of the agent, importer or distributor registered in the People’s Republic of China, shall be declared.
 The date of manufacture and the date of minimum durability shall be clearly declared
 Any special conditions for the storage of the food shall be declared on the label
 The label of a food which has been treated with ionizing radiation shall be marked ―irradiated food in close proximity to the name of the food.
 Any ingredient which has been treated with ionizing radiation shall be declared in the table of ingredients.

The following information must be presented in the Russian language:

 Name, country, address of producer, packer, exporter and importer
 Country of origin, trademark, net weight or quantity, composition, nutritional value based on the specificity of the product, storage conditions
 Use-by date or shelf-life expiration date, regulatory or technical documents with which the products can be identified
 Confirmation of conformity and other data.
 Food additives, biologically active additives, flavorings, components of non-traditional composition (including components from raw materials containing protein that does not exist naturally and was added while manufacturing the product)
 Food products that are products of biotechnology, obtained from products of biotechnology, or contain components from products of biotechnology
 If more than 2 percent of the recommended daily allowance of proteins, fats, carbohydrates, or calories is included in a 100-gram serving, this information must be included on the label
 The label must also indicate if a 100-gram serving contains more than 5 percent of the daily recommended allowance of minerals or vitamins
 For frozen or processed vegetables, Products must be accompanied by a sanitary-epidemiological conclusion. For 07013 – leguminous dried, de-shelled, cleared from the seed skin, chipped or non-chipped – products are subject to phytosanitary inspection.

Increasingly, it has been observed that importing countries are demanding for WHO-GMP certification instead of ISO9000/HACCP. Good manufacturing practice (GMP) is part of a quality system covering the manufacture and testing of active pharmaceutical ingredients, diagnostics, foods, pharmaceutical products and medical devices. GMP certification confirms the products identity, composition, quality, purity and strength which they represent in the market. Under it, there is a set of guidelines that offer a system of procedures and documentation by which the confirmation of the products are given. The benefits of WHO-GMP certifications are multifold. They are listed below: 1. Reduced duplication of inspections 2. Enhanced market access 3. Export facilitation 4. Cost savings 5. Customers, employees, stockholders, regulators and competitors develop sustainable respect for an organization which demonstrates its proactive commitment to food safety.

 The CODEX Codex Alimentarius Commission which is part of the Joint FAO/WHO Food Standards Programme states that Codex MRLs and EMRLs are established for raw agricultural commodities. However, where it is considered necessary for consumer protection and facilitation of trade, MRLs and EMRLs are also established for certain processed foods on a case-by-case basis, taking into consideration information on the influence of processing on residues.
 The following MRLs have been collated as per the identified food products for the purpose of this study. As MRLs are also dependent on the pesticides dosage used at the point of cultivation of a particular raw material, hence the MRL for those individual raw materials are also captured:
• For maize
o Paraquat 0.05 mg/Kg
o Penthiopyrad 0.05 mg/Kg
o Phorate 0.05 mg/Kg
o Sulfuryl fluoride 0.1 mg/Kg
o Propargite 0.2 mg/Kg
• For biscuits
o Methyl Bromide 0.01 mg/Kg

WTO Agreement on Implementation of Article VI of the General agreement on Tariffs and Trade (GATT) 1994 is commonly known as the Anti-Dumping Agreement.

 Sections 9A, 9B and 9C of the Customs Tariff Act, 1975 as amended in 1995 and the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, framed there under form the legal basis for Antidumping Investigations and for the levy of anti-dumping duties in India.
 Administered by the Directorate General of Anti-dumping and Allied Duties (DGAD) functioning in the Department of Commerce in the Ministry of Commerce and Industry.
 Headed by the “Designated Authority”.
 The Designated Authority, however, only conducts the investigation and makes recommendation to the Government for imposition of measures.
 Such duty is finally imposed/ levied by a Notification of the Ministry of Finance.

Dumping is said to occur when the goods are exported by a country to another country at a price lower than its normal value and this causes injury to domestic industry.

 Dumping is an unfair trade practice which can distort international trade by keeping competitors out of a particular market
 Anti-dumping measures, as an instrument of fair competition, are intended to take care of this distortion.
 The use of anti-dumping measure is permitted by the WTO.
 Anti-dumping duty is recognised as an instrument for ensuring fair trade.
 It is not a measure of protection per se for the domestic industry but provides relief to the Domestic Industry against the Injury caused by Dumping.
 Often mistaken and simplified to mean cheap and low priced imports. This is not so. In legal sense, it means that export of goods by a country to another country at a price lower than its Normal Value. Thus, dumping implies low-priced imports only in the relative sense (relative to the Normal Value), and not in absolute sense.
 In simple parlance, the Normal Value is the selling price of the product in the domestic market of the exporting country.
 If the Export Price is lower than the Normal Value, it constitutes Dumping.
 Thus, there are two fundamental parameters used for determination of dumping, namely, the normal value and the export price.
 Both these elements have to be compared at the same level of trade, generally at ex-factory level, for assessment of dumping.
 Import of undervalued/under-invoiced goods, intended to evade customs duty or illegal trade like smuggling does not fall within the purview of anti-dumping measures.

Normal value is the comparable price at which the goods under complaint are sold, in the ordinary course of trade, in the domestic market of the exporting country.

 If the normal value cannot be determined by means of the domestic sales, the following two alternative methods may be employed to determine the normal value:
• Comparable representative export price to an appropriate third country.
• Constructed normal value, i.e. the cost of production in the country of origin with reasonable addition for administrative, selling and general costs and reasonable profits.

Export price of the allegedly dumped goods means the price at which it is exported to the complaining country.

 It is generally the CIF value minus the adjustments on account of ocean freight, insurance, commission, etc. so as to arrive at the value at ex-factory level.

The margin of dumping is the difference between the Normal Value and the Export Price of the goods under complaint. It is generally expressed as a Percentage of Export Price.

 For determination of dumping, the two variables, viz. Normal Value and Export Price, have to be compared at the Same Level of Trade, (normally at the ex-factory level).

Domestic industry means the domestic producers as a whole engaged in the manufacture of the like article or those whose collective output of the said article constitutes a Major Proportion of the Total Domestic Production of That Article.

The producers who are related to the exporters or importers of the alleged dumped article or are themselves importers thereof are excluded from the purview of ‘domestic industry’ in certain situations.

Like product means a product which is identical i.e. alike in all respects to the product under consideration. In the absence of such a product, another product which, although not alike in all respects, has characteristics closely resembling those of the product under consideration.

Methodology for Calculating Dumping Margin

 The dumping margin is normally to be established
• On the basis of comparison of a Weighted Average Normal Value with a Weighted Average of Export Price of all comparable export transactions
• Or by comparison of Normal Value and Export Prices on a Transaction-To-Transaction basis.
 A normal value established on a weighted average basis may be compared to the prices of the individual export transactions if it is found that the patterns of export prices differ significantly among different purchasers, regions or time periods and if an explanation is provided as to why such differences cannot be taken into account appropriately by the use of weighted average- to weighted average or transaction-to-transaction comparison.
 In case the sales of the like product in the domestic market of the exporting country is less than 5% of the quantity of the export sale of the product under consideration to the importing country, such domestic sales in the market of the exporting country can be disregarded for determining normal value on account of being not sufficient in quantity for a proper comparison.
 When the weighted average selling price of the transactions under consideration for determination of the normal value is below the weighted average per unit costs, or the volume of sales below per unit costs are 20% or more of the volume sold in transactions under consideration, then such loss making transactions have to be disregarded for determining normal value.
 Normally the Export Price of the product from the country of export is to be compared with the Comparable Domestic Price of the product in the country of export for arriving at the dumping margin.
 However if the product is not produced in the country of export, then comparison of export price may be made with the price in the country of origin.

Zeroing

 While making comparison of normal value and export price either on a weighted average basis or on a transaction-to-transaction basis, some comparisons at intermediate stage may result in negative dumping margin i.e. where export price is more than the normal value.
 In the final calculation of dumping margin if such negative dumping margins are not taken into account, such practice is called zeroing.
 India does not follow the Zeroing Policy.

Dumping Margin determination in a Non-Market Economy

 Non-Market Economy country means any country which the Designated Authority determines as not operating on market principles of cost or pricing structures
 Sales of merchandize in such country do not reflect the fair value of the merchandize, in accordance with the criteria specified in sub-paragraph (3) of paragraph 8 of Annexure I of the Anti dumping Rules of India.
 Paragraph 7 and 8 of Annexure I of Anti dumping Rules of India lays down the procedure for determination of normal value in case of imports from non-market economy countries.

Injury

 The WTO Agreement on implementation of Article VI of GATT (Anti dumping Agreement) lays down that injury can be
• Material injury to a domestic industry,
• Threat of material injury or
• Material retardation of the establishment of such an industry.
 Injury may be analyzed in terms of
• The volume effect and
• The price effect of the dumped imports.
 The volume effect of dumping relates to the market share of the domestic industry vis-à-vis the dumped imports from the subject country / ies.
 With regard to the price effect, The Designated Authority shall consider
• Whether there has been a significant price under cutting by the dumped imports as compared with the price of the like product in the domestic market, or
• Whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increase which otherwise would have occurred to a significant degree.
 The effect has to be seen with regard to the Actual/potential decline in
• Sales
• Output
• Profits
• Market share
• Productivity
• Return on Investment
• Capacity Utilization
• Factors affecting domestic prices;
• Employment
• Inventory/Stocks
• Wages
• Effects on cash flow, growth
• Ability to raise capital or investment etc.
 The parameters by which injury to the domestic industry is to be assessed in the anti dumping proceedings are Economic Indicators which have a bearing upon the state of industry as the magnitude of dumping, and the decline in sales, selling price, profits, market share, production, utilization of capacity etc.

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