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India may phase-out subsidies for textiles exports
May '12
India may gradually eliminate export subsidies to the textile industry and may initiate talks with other countries to ensure that the country's key export sector does not lose out its competitiveness while the subsidies are removed.

Such an exercise is necessitated by the subsidies and countervailing measures agreement of the World Trade Organization (WTO). The agreement allows developing countries to give subsidies as long as the exports from that particular sector constitute less than 3.25 percent of world trade.

India's share has been higher than 3.25 percent in world textiles trade for five years and hence, the country needs to remove the subsidies given to the textiles sector by 2015, as the WTO agreement provides eight-year time period to do so.

“India has crossed the threshold level of 3.25 percent of world trade in textiles and clothing, and therefore, the US and other countries think we are not eligible to extend any subsidies on our exports of textile products,” Mr. DK Nair, Secretary General, Confederation of Indian Textile Industries (CITI) told fibre2fashion.

As per the WTO agreement, any concession/facility that is available to exporters, but is not available to suppliers of the same product to the domestic market, can be interpreted as an export subsidy.

Any facility/concession that stipulates export as an eligibility criterion is also an export subsidy. Hence, SEZ, EOUs, EPCG licenses, Focus schemes, interest subvention on export credit, advance licenses, etc. also come under the definition of export subsidies.

“If India is forced to accept that we have reached export competitiveness in textile products, these products may have to be taken out from concessions/ subsidy schemes over a period of time,” says Mr. Nair.

“Under the WTO provisions, there are procedures for deciding whether India has achieved the threshold limit for textiles and apparel exports in world trade. The issue is subject to negotiations bilaterally and in WTO forums,” he adds.

Fibre2fashion News Desk - India

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