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Timber Legality Risk Assessment India

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Timber Legality Risk Assessment India Timber Legality Risk Assessment India <MONTH>Version 1.1 <YEAR> l May 2017 COUNTRY RISK ASSESSMENTS This risk assessment has been developed by NEPCon with support from the LIFE programme of the European Union, UK aid from the UK government and FSCTM. www.nepcon.org NEPCon has adopted an “open source” policy to share what we develop to advance sustainability. This work is published under the Creative Commons Attribution Share-Alike 3.0 license. Permission is hereby granted, free of charge, to any person obtaining a copy of this document, to deal in the document without restriction, including without limitation the rights to use, copy, modify, merge, publish, and/or distribute copies of the document, subject to the following conditions: The above copyright notice and this permission notice shall be included in all copies or substantial portions of the document. We would appreciate receiving a copy of any modified version. This Risk Assessment has been produced for educational and informational purposes only. NEPCon is not liable for any reliance placed on this document, or any financial or other loss caused as a result of reliance on information contained herein. The information contained in the Risk Assessment is accurate, to the best of NEPCon’s knowledge, as of the publication date The European Commission support for the production of this publication does not constitute endorsement of the contents which reflect the views only of the authors, and the Commission cannot be held responsible for any use which may be made of the information contained therein. This material has been funded by the UK aid from the UK government; however the views expressed do not necessarily reflect the UK government’s official policies. Contents A. Introduction ........................................................................................................ 1 B. Overview of legality risks ...................................................................................... 2 C. Overview of the forest sector in India ...................................................................... 5 D. Legality Risk Assessment ...................................................................................... 1 LEGAL RIGHTS TO HARVEST ........................................................................................ 1 1.1. Land tenure and management rights ................................................................... 1 1.2. Concession licenses ........................................................................................... 5 1.3. Management and harvesting planning ................................................................. 6 1.4. Harvesting permits ............................................................................................ 9 TAXES AND FEES ..................................................................................................... 13 1.5. Payment of royalties and harvesting fees ........................................................... 13 1.6. Value added taxes and other sales taxes ........................................................... 17 1.7. Income and profit taxes ................................................................................... 20 TIMBER HARVESTING ACTIVITIES .............................................................................. 23 1.8. Timber harvesting regulations .......................................................................... 23 1.9. Protected sites and species .............................................................................. 25 1.10. Environmental requirements ........................................................................... 28 1.11. Health and safety .......................................................................................... 30 1.12. Legal employment ......................................................................................... 32 THIRD PARTIES’ RIGHTS ........................................................................................... 35 1.13 Customary rights ........................................................................................... 35 1.14. Free prior and informed consent ..................................................................... 36 1.15. Indigenous/traditional peoples’ rights .............................................................. 38 TRADE AND TRANSPORT ........................................................................................... 41 1.16. Classification of species, quantities, qualities .................................................... 41 1.17. Trade and transport ...................................................................................... 44 1.18. Offshore trading and transfer pricing ............................................................... 49 1.19. Custom regulations ....................................................................................... 50 1.20. CITES .......................................................................................................... 52 1.21. Legislation requiring due diligence/due care procedures ..................................... 53 Annex I. Timber source types ..................................................................................... 55 This page has been left intentionally blank A. Introduction This Timber Legality Risk Assessment for India provides an analysis of the risk of sourcing timber from areas of illegal harvesting and transport. NEPCon has been working on risk assessments for timber legality, in partnership with a number of organisations, since 2007. In that time, NEPCon has developed timber risk assessments for more than 60 countries, illustrated in Figure 1. Figure 1. Countries for which NEPCon have developed a legality risk assessment for timber The risk assessments are developed in collaboration with local forest legality experts and use an assessment methodology jointly developed by FSC and NEPCon. A detailed description of the methodology can be found on NEPCon’s website. 1 Timber Legality Risk Assessment – India B. Overview of legality risks Timber Risk Score: 21 / 100 in 2017 This report contains an evaluation of the risk of illegality in India for five categories and 21 sub-categories of law. We found: Specified risk for 15 sub-categories. Low risk for 4 sub-categories. No legal requirements for 3 sub-categories. The Timber Risk Score for India is 18 out of 100. The key legality risks identified in this report concern legal rights to harvest, taxes and fees, timber harvesting activities and trade and transport. For Legal Rights to Harvest, there is a risk of: Non-recognition and violation of forest dwellers rights (Sub-category 1.1). Forest encroachment and illegal logging conducted on land not under the legal tenure of loggers due to among others corruption among government officials (1.1). Timber harvesting without a permit, or over harvesting on permitted volumes (1.4). For Taxes and Fees, there is a risk of: Private businesses not paying the correct royalties and harvesting fees (1.5). Widespread VAT evasion and corruption in the implementation of VAT laws (1.6). Risk of non-declaration/under-reporting of incomes and profits, and likewise incidence of corruption among tax authorities (1.7). For Timber Harvesting Activities, there is risk of: Illegal harvesting occurring within protected areas (1.9). Risk of protected species being illegally harvesting due to the prevalence of illicit logging and corruption among government officials (1.9). Risk that labour laws are violated (e.g. non-payment of minimum wages, use of child labour and incidences of bonded labour), the risk mostly relates to private forest companies (1.10 and 1.11). Regarding third parties’ rights, there is a risk that customary law and indigenous people’s rights are violated (1.15) Risk that customary, traditional and indigenous rights are not recognized and violated, and a risk that local communities are not appropriately involved in the decision-making processes in context of forest management activities. For Trade and Transport, there is a risk of: Incorrect specification (e.g. species, quantity and quality) of forest products to evade taxes and transit fees among others because of collusion with forest officials (1.16). Illegal issuance of trade and transport documents has been due to the high prevalence of corruption (1.19). Inadequate screening of illegal timber at customs, due to frequent seizures of wood exported illegally from India, including CITES species and a risk of illegal import and export of timber from CITES species (1.19 and 1.20). 2 Timber Legality Risk Assessment – India Timber source types and risks There are two main timber source types found in India, timber grown in government reserved forests and timber grown in plantations. Within these two high level source types, there are a two further source types. Knowing the “source type” that timber originates from is useful because different source types can be subject to different applicable legislation and have attributes that affect the risk of non-compliance with the legislation. We have analysed the risks for all source types and found the risks differ between the source types. Government Timber from Government Reserved Forests/ Unclassed Forests Reserved Forests/ (can be natural forests, plantations, degraded areas or barren Unclassed Forests land), managed either solely by the State Forest Department or jointly by the State Forest Department and local communities through Joint
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