RESTRICTED
WORLD TRADE G/TRIMS/W/11
9March 1998
ORGANIZATION(98-0915)
Original: English Committee onTrade-Related Investment Measures
COMMUNICATION FROM JAPAN
Thefollowing communication, dated 5March 1998, hasbeenreceived from thePermanent
Mission ofJapan forcirculation toMembers.
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NewAuto Policy ofIndia
InthePublic Notice No.60dated 12December, theGovernment ofIndia announced anew
policy relating totheimport ofCKD/SKD kits/components byjointventure carmanufacturer companies
under aMemorandum ofUnderstanding tobesigned withtheGovernment.
Under thenewpolicy, alljointventure manufacturers arerequired toenterintoanMOU with
theDirectorGeneralofForeignTradeforimportofCKD/SKDkits/components.Importsofcomponents
formotor vehicles inCKD/SKD form willbeallowed forimportation against alicence, which will
beissued onlytojointventure automobile companies onthebasis ofMOUs.
TheGovernment ofJapan isconcerned about theconformity ofthemeasures withIndia's
obligations under theWTO agreements. Ofparticular concern isthefactthat,under thepolicy, the
MOU tobesigned withtheGovernment ofIndia willrequire jointventure automobile manufacturing
companies tofulfil certain requirements, interalia:
- "indigenization" ofcomponents uptoaminimum levelof50percentinthethirdyear
orearlier from thedateofclearance ofthefirstimport consignment ofCKD/SKD
kits/components and70percentinthefifthyearorearlier;
- thefirms entering intotheMOU would achieve "abroad neutralization" offoreign
exchange overtheentire period oftheMOU interms ofbalancing between theactual
c.i.f. value ofimports ofCKD/SKD kits/components andthef.o.b. value ofexports
ofcarsandautocomponents overthesaidperiod;
- fromthethirdyearonwards, theMOU-signing firms would haveanexport obligation
equivalent tothec.i.f.value ofimports made bythemuntilthattimefortheremainder
oftheMOU period untiltheycomplete theentire export obligation.
From thefourth yearonwards, thevalue ofimports ofCKD/SKD mayberegulated
withreference totheexport obligation fulfilled intheprevious years aspertheMOU.
TheGovernment ofJapan would appreciate hearing howtheGovernment ofIndia plans to
ensure thatthese measures areinconformity withitsobligations under theWTO agreements.
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