Senior commerce ministry officials say the US possibly wants to await the outcome of the verdict of the World Trade Organisation (WTO) Appellate Body on India's appeal against a WTO panel ruling on removal of its quantitative restrictions on imports expected on July 17.

New Delhi had proposed June 30 as the date for holding discussions on the automobile policy, but this was not found suitable for the US, which wanted it to be postponed, officials say. The US will indicate a new date for the purpose, they add.

The appellate body's ruling is crucial as that will determine whether India can continue with its quantitative restrictions on imports on balance of payments grounds.

As per the rules, a member-country of the WTO which disputes the policy of another member-country can ask for bilateral consultations,and the country against which the dispute has been raised has to indicate a date within days from the date of filing the dispute. It is on this basis that India had set June 30 as the date for consultations.

The US considers that India's policy that foreign auto giants wishing to set up passenger-car projects in the country must maintain foreign-exchange neutrality militates against the rules.

Indications are that Director-General of Foreign Trade (DGFT) NL Lakhanpal will participate in the discussions in Geneva. He will be joined by India's ambassador to the WTO S Narayanan.

The US call for bilateral talks comes soon after the last round of consultations on the policy between India and the European Union in December 1998. Then, the US and Japan had participated in the meeting as observers.

This followed a petition filed by the EU in the dispute settlement body of the WTO questioning India's auto policy.

Lakhanpal said that the Indian side gave a good account of the country's auto policy and theEuropean Union was "reasonably" satisfied with the explanation, and since then "we have not heard from them." Under the one-and-a-half-year-old auto policy, passenger cars figure in the restricted list of imports, which include both the completely knocked down (CKD) and semi knocked down (SKD) condition.

Quantitative restrictions also apply on import of cars and, hence, are not allowed for import unless auto majors sign a memorandum of understanding with the DGFT to set up shop in India.

Companies entering into an memorandum of understanding will have to achieve broad neutralisation of foreign exchange over the entire period of the memorandum of understanding, in terms of balancing between the actual cost, insurance and freight value of imports of the completely knocked down and semi knocked down components and the free on board value of export of cars and auto components over the said period.

Japan refrains from petitioning WTO body

Unlike the European Union, Japan has not petitioned thedispute settlement body of the World Trade Organisation on India's automobile policy, says Lakhanpal.

Japan had earlier raised some issues concerning the policy and the Indian side gave its explanation, he said.

The objections from the US on the policy notwithstanding, the policy continues to be a big attraction for foreign auto giants, he said. In fact, foreign auto-makers like Ford, Hyundai and Honda, which have set up shop in India, are progressing towards indigenisation, a key element of the policy.