India plans to go ahead with export concessions in textile sector

The Dollar Business Bureau The Government of India’s decision on Tuesday over the textile exports will definitely come as good news for the textile exporters. According to a latest report, the Indian government has decided to move on with export concessions for the textile sector in the current fiscal year and the government is also mulling to extend the policy for the following two years. This move by the Indian government comes as a challenge to the United States which is opposing India’s decision on export concessions in the textile sector. The United States is challenging India’s decision saying that, under WTO rules, India will no longer be able to make decisions over giving sops to the textile exports, as it had already entered into the global competition for textile exports eight years ago. According to the WTO Agreement on Subsidies and Countervailing Measures, any country will have right to give export subsidies only if it has not attained export competitiveness,  which is defined as attaining a 3.25 per cent share in world trade for a product for two consecutive years. Once a member country attains export competitiveness, it will have a eight-year long duration to phase out of its export subsidies.  In this case, New Delhi argues that WTO has taken into consideration India’s world share in the global textile market with respect to its statistics in FY2009-10. In regard to this, India says that its period will end after eight years starting from FY2009-10 and will rethink in 2018, i.e, after eight years as per WTO rules. However, sources say that the Commerce and Textiles Ministries of India are already working on alternative schemes that abide by the WTO rules, in order to replace the export sops for the sector over the next three years. According to data from the Investment and Technology Promotion Division, Ministry of External Affairs, GoI, the Indian Textiles Industry accounts for about 24% of the world's spindle capacity and 8% of global rotor capacity. As the second largest employment providing industry in India, the textiles industry contributes about 14% to the industrial production, 4% to country’s GDP and 27% to the foreign exchange earnings. The potential size of the Indian textiles and apparel industry is expected to reach $223 billion by 2021, says a report from the government body.  

This article was published on February 17, 2015.