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India to apply WTO auto ruling from Sept 5

M.R. Subramani

CHENNAI, July 28

INDIA has been given time till September 5 by the World Trade Organisation (WTO) to implement the dispute settlement body (DSB) ruling on the country's automobile policy.

The DSB, in its ruling in December 2001, recommended that two clauses in the automobile policy that allows foreign manufacturers to assemble cars in India by importing SKD/CKD (semi-knocked down/completely knocked down) kits were, in particular, against its GATT obligations. One of the clauses relates to indigenisation of production by the car makers. The other is regarding export obligation of the manufacturers against the import of SKD/CKD kits.

In view of the Government agreeing to abide by the ruling, the memorandum of understanding signed with some of the car manufacturing companies will have to be amended.

However, the Government has contended that the implementation of the ruling is unlikely to cause any problem since restrictions on imports have been removed from April 2001. This was also following a WTO ruling that asked it to remove import curbs imposed on balance on payment grounds.

In a communication this week, the WTO said India, the US, the European Commission (EC) had mutually agreed that the rulings and recommendations of the DSB would be implemented in five months from April 5.

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