Effective from this date, all import restrictions on the auto sector are dueto be lifted and a formal request for the extension is expected to beforwarded to the Council shortly, senior commerce officials say.

Quoting legal opinion, officials also say that the requirement of dividendbalancing on 22 consumer industries to be met by foreign companies under thecurrent industrial policy is not "TRIMs-inconsistent" and is, therefore,being continued.

They also point out that two TRIMs regarding the local requirement formanufacture of newsprint as well as pencillin G and riffampicin are nolonger in force now.

The Council recently decided to consider the issue of extending thetransition perioid sought by some developing countries, including India, toimplement the TRIMs agreement signed under the WTO aegis on January 1, 1995.Officials explain that apart from the auto policy, India does not have anyWTO-inconsistent TRIM. They say the US, European Union and Japan considerIndia's auto policy to be a "WTO-inconsistent" TRIM and the US hasapproached the WTO Dispute Settlement Body to set up a panel for disoutesettlement.

"Our view is that we have balance of payments cover till March 31, 2001 andtherefore can maintain TRIM on the auto sector till then, a fact which hadnotified to the WTO under the TRIMs agreement", officials point out.Moreover, under the agreement signed with the US a few months ago, theimport restrictions on the auto sector are to be removed by April 1, 2001only.

The first phase of the agreement envisaging removal of QRs on 714 tarifflines took effect from April 1 this year and the second phase involvinglifting of QRs on cars and other sensitive items like cigarette,liquor,wheat, rice etc is to commence from April 1 next year.

India has been allowing imports of SKD/CKD kits/components under the autopolicy that seeks to attract foreign direct investment in the sector. Foreign auto companies keen on setting up shop in India will have tomaintain foreign exchange neutarlity over the entire period of thememorandum of understanding (MoU) to be signed between them and thedirector-general of foreign trade (DGFT) in the commerce ministry.

Some developing countries had been facing practical problems in implementingthe TRIMs agreement and had therefore sought extension beyond the five yearperiod ending on January 1, 2000.