Ahead of the foreign trade policy (FTP), likely to be announced next month, the Directorate General of Foreign Trade has made a case for paring of incentives provided to the textile sector, in line of the WTO commitments.

The foreign trade department has written to the department of revenue, asking it to not give incentives to the sector in upcoming FTP as India has reached the export competitiveness in the sector, as per the threshold set by the World Trade Organization (WTO).

According to Article 27.6 of Agreement on Subsidies and Countervailing Measures, export competitiveness in a product exists if a developing country’s exports of that product have reached a share of at least 3.25 per cent in world trade of that product for two consecutive calendar years.
 

India attained export competitiveness in the textile sector in 2008-09 and as per WTO rules, it has to phase out the export subsidies provided to the sector by 2018.

However, the industry is of the view that incentives should be withdrawn only in 2018, when the deadline ends.

“We have exceeded the share of textiles in the world trade as per the WTO norms. But the industry is of the view that the government should not phase it out, rather it should withdraw it when the time comes. The industry is prepared for the withdrawal but the debate is on the timing. That is crucial especially when the EU has taken India out of GSP,” Ajay Sahai, director general, Federation of Indian Export Organisation (Fieo), said.

The sector got sops worth Rs 20,000 crore in 2013-14 under several schemes including focus market scheme and focus product scheme.

Source:-indianexpress.com