STATE
TRADING
Questions Posed By the European Union on the tamil nadu
state marketing corporation limited (tasmac)
The following communication, dated 12 August
2016, is being circulated at the request of the Delegation of the European
Union.
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In
April 2015, the EU submitted written questions to India (G/STR/Q1/IND/6)
seeking clarifications on the legal status and activities of the Tamil Nadu
Marketing Corporation Limited (TASMAC) to which India replied on 25 April 2016
(G/STR/Q1/IND/10). On 9 June 2016, at the last meeting of the WP on STEs, we
raised orally further questions to India. On that occasion, India requested the
EU to provide the questions in writing.
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The EU would appreciate to
receive additional clarifications in order to assess whether TASMAC would meet
the criteria for being notified as a STE under the provisions of Article XVII
of the GATT and the related understanding and illustrative list.
In this respect, the EU has
assessed whether TASMAC fulfils the following criteria: (i) a governmental or
non-governmental entity; (ii) the granting to the enterprise of exclusive or
special rights or privileges; and (iii) a resulting influence, through the
enterprise's purchases or sales, on the level or direction of imports or exports.
(i) A governmental or
non-governmental entity
India, in its replies states
that TASMAC is not a STE recognised under the Foreign Trade Policy of India. In
the EU's view, this is neither relevant nor sufficient in this context.
According to the available
information, TASMAC functions under the
administrative control of the Prohibition and Excise Department of Tamil Nadu,
which is a branch of the Ministry for Electricity, Prohibition and Excise of
the Government of Tamil Nadu. In a Notice Inviting offers for registration of
Imported Foreign Liquor brands for sale to TASMAC, the Government of Tamil Nadu clearly
defines TASMAC as a "Government of Tamil Nadu undertaking" and states
that:
"Tamil Nadu State Marketing Corporation
Limited is a Company wholly owned by the State of Tamil
Nadu having exclusive privilege of conducting wholesale and retail
trade in Indian Made Foreign Spirits (IMFS) and Beer in the whole State. It is
also dealing in Imported Foreign Liquor (IFL) brands."
Therefore, in the EU's view,
TASMAC should be considered as a governmental entity.
EU question
No. 1: Considering the above, could
India clarify whether it agrees with our conclusion in considering TASMAC a
governmental entity? If not, could India submit a detailed reasoning that would
contradict our assessment?
(ii) The granting to the enterprise of
exclusive or special rights or privileges
In a Policy
Note of 2015 from the Prohibition and Excise Department (Demand No. 37) of
the Government of Tamil Nadu, point 5, it is stated that:
"TASMAC has been granted the
exclusive privilege of Wholesale of Indian Made
Foreign Liquor for the whole state of Tamil Nadu (…) and is carrying
on the Wholesale distribution of liquor from 23.05.1983. (…) TASMAC has been
granted the exclusive privilege of Retail Vending of
Indian Made Foreign Liquor and the retail sale of liquor is carried
on by TASMAC from 29.11.2003."
Therefore,
the EU does believe that TASMAC has been granted special privileges.
EU question
No. 2: On the basis of the above explanations,
could India clarify whether it agrees with our conclusions that TASMAC has been
granted exclusive or special rights or privileges? If not, could India
submit a detailed reasoning that would contradict our assessment?
(iii) A resulting influence,
through the enterprise's purchases or sales, on the level or direction of
imports or exports
In a Policy Note of 2015 from the
Prohibition and Excise Department (Demand No. 37) of the Government of
Tamil Nadu, point 5, it is stated that:
"TASMAC is also marketing Imported Foreign Liquor, Beer and Wine products.
(…) TASMAC has been appointed as the canalising agency
from 02.03.2012 onwards, to regulate the import of
foreign liquor by collecting a service charge of 3% of the special
fee. In addition to the special fee, 58% VAT is also levied on the sale of
foreign liquor. (…) Further the imported foreign liquor is also directly purchased and sold through
retail outlets like malls for the domestic market by the Tamil Nadu State
Marketing Corporation Limited."
Moreover, in the "proceedings of the
Commissioner of Prohibition and Excise" dated 02.03.2012, it is stated
that "TASMAC is also responsible for the import and sale
of Imported Foreign Liquor (IFL[1]) brands."
Therefore,
the EU considers that TASMAC fully fulfils the
above criteria as it is marketing
imported alcoholic beverages, it is the canalising agency to regulate the
import of foreign liquor and it is in charge of the retail of IFL.
EU question
No. 3: On the basis of the above
explanations, could India clarify whether it agrees with our conclusions that
TASMAC has an influence, through its purchases or sales, on the level or
direction of imports or exports? If not, could India submit a detailed
reasoning that would contradict our assessment?
Importation of items under the HS Chapter 22
In addition, the EU would like
to receive further clarifications on the conditions of importation of items
under the HS Chapter 22. Indeed, in its reply provided on 25 April 2016
(G/STR/Q1/IND/10), India explained that TASMAC is not a STE recognized under
the Foreign Trade Policy (FTP) as all items under chapter 22 (comprising of
Beverages, spirits and vinegar) are under 'free' category i.e. their import is
allowed without any licensing conditions and, since none of the HS lines under
chapter 22 are under STE category, there are no STEs designated for their
import. However, the provisions included in the Policy Note of 2015 from the
Prohibition and Excise Department (Demand No. 37) of the Government of Tamil
Nadu seem to contradict with India's reply.
EU question
No. 4: Could India clarify what are
the conditions of importation of items under the HS Chapter 22?
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[1] Liquor imported from foreign countries as well as other States.