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