The schemes amount to financial contributions by government, which sacrifices duties, the commission ruled on complaints against the schemes.The schemes on which the commission has given its adverse ruling are the duty entitlement passbook, export promotion capital goods, export processing zone/export oriented units and income-tax exemption.

The passbook scheme, discontinued since March 31, 1997, was also found to be hurting the industry in the union.

On complaints that India extended export subsidies for anti-biotics, the commission ruled these were indirect subsidies to exporters harming interests of domestic industry in European Union. The commission's ruling came in wake of complaints by antibiotics' producers in the European community, led by Antibiotics SA, Madrid, Spain; Biochemie GMBH, Kundl, Austria; and ACS Dobfar SPA, Tribiano, Italy, lodged on September 29 last year.

The commission has, in its order, imposed provisional anti-subsidy duties ranging between 6.6 per cent and 14.6 per cent for antibiotics exports from India, though three companies were let off with a zero levy.

Referring to discontinued passbook scheme, which provides for utilising credits earned on export duties for imports, the EC said it was against the provisions of basic trade regulations in the EU.

"The passbook credit is not calculated in relation to inputs actually to be consumed in the production process. Further more, the exporter is under no obligation to import goods free of duty which must be consumed in the production process," it said.

The commission has, in fact, taken into calculation the reported benefits of the passbook scheme for imposing the anti-subsidy provisional duties.Scrutinising the other four export growth schemes, the commission said India had failed to examine the actual transactions to find out if excess payment had been foregone for duty-free imports.

Considering the factors for the ruling, the commission said the volume of imports of anti-biotics from India increased almost 300 per cent in recent memory. New Delhi's share of the European Community market increased by 157 per cent during the same period. Besides volume of imports from India between September 1996 and June 1997 was over 4 per cent of total imports of like products in the European Community, it pointed out.

The commission said prices of antibiotics from India between 1993 and June 1997 decreased by 40 per cent though it ruled that price comparison with data was not meaningful even if the decline was seen as a downward trend.Also during 1993-96, the European Union industry's share in the antibiotics in that region declined to 18.1 per cent from 25 per cent to 18.1 per cent and companies profitability had declined by 66.5 per cent.

At the same time, imports from US during the period doubled, while China's market share declined by 43 per cent, the commission pointed out. Even average prices of the products from other regions were higher than those from India, whose exporters had benefitted from the export sops. The provisional duties imposed in June should be made definitive by January and ratified by a simple majority of the 15-member EU council of ministers.