VZCZCXRO0170
RR RUEHBI RUEHCI
DE RUEHCG #1176 1580249
ZNR UUUUU ZZH
R 070249Z JUN 06
FM AMCONSUL CHENNAI
TO RUEHC/SECSTATE WASHDC 8597
RUEHRC/DEPT OF AGRICULTURE WASHDC
INFO RUEHNE/AMEMBASSY NEW DELHI 1729
RUEHBI/AMCONSUL MUMBAI 4778
RUEHCI/AMCONSUL CALCUTTA 0525

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