CORRECTIONS TO CHENNAI 01105 - VAT ON IMPORTED

UNCLAS CHENNAI 001176 SIPDIS SENSITIVE SIPDIS USDOC FOR MAC/ANESA/OSA/LDROKER/ASTERN USDA/FAS/CMP/HTP/KSISSON/JJONES USDA/FAS/ITP/JFLEMINGS/KMEARDRY USTR FOR SOUTH ASIA-AADLER E.O. 12958: N/A TAGS: ECON EFIN ETRD PGOV IN SUBJECT: CORRECTIONS TO CHENNAI 01105 - VAT ON IMPORTED FRUIT IS VERY UNLIKELY REF: CHENNAI 01105 ¶1. (U) SUMMARY: Post has learned that trade sources quoted in Reftel were misinformed and that a VAT on imports of fresh fruits and vegetables, reported as a possibility in Reftel, is extremely unlikely. A Government of Karnataka tax official has confirmed that the imposition of a VAT on imported fruit is not at all likely and further suggests that any VAT on imports is at least a year off. END SUMMARY -------------- --- SOURCES WERE UNRELIABLE; LITTLE CHANCE OF VAT ON IMPORTED FRUIT -------------- --- ¶2. (U) Post has learned that Ameerul Hussian, Coordinator, National Fruits Agency, and Keith D. Cunha, General Manager for Imports at Nilgris Dairy Farms, who were sources for Reftel, were misinformed and that the information they provided with regard to a possible VAT on imported apples is erroneous. Contrary to their comments reported in Reftel, it is extremely unlikely that the Government of India will make any move to impose a VAT on imports of fresh fruits and vegetables. -------------- -- INDIA UNLIKELY TO VIOLATE PRINCIPLE OF NATIONAL TREATMENT -------------- -- ¶3. (U) The imposition of a VAT on imports of fresh fruit and vegetables would presumably be in violation of the WTO principle of National Treatment, which requires that imported and locally-produced goods be treated equally. In its most recent budget, the Government of India imposed a special countervailing duty (CVD) of 4 percent on imports, but exempted fresh fruits and vegetables so as not to violate the principle of National Treatment. We expect they would continue to respect the principle of National Treatment and exempt imports of fresh fruits and vegetables even if a VAT on imports were to be implemented. -------------- -------------- KARNATAKA OFFICIAL SUGGESTS THAT VAT ON IMPORTS IS A YEAR OFF -------------- -------------- ¶4. (SBU) Post talked with Karnataka Commissioner of Commercial Taxes, P. Ravikumar, who confirmed that the imposition of a VAT on imported fresh fruits is extremely unlikely for the reasons noted above. Ravikumar further stated that any sort of VAT on imports is unlikely to be imposed soon since its implementation requires a constitutional amendment. He suggested that implementation of a VAT on imports if implemented at all is at least one year off. ¶5. (U) This message was coordinated with the Foreign Agricultural Service office at Embassy New Delhi. HOPPER