United States registered conflict against incentive rounds provided for boosting exports, declaring it as a violation of trade rules for export competitiveness in textiles. The issue was raised by Commerce Department of US about a week back, when India has expanded scope of Merchandise Exports from India Scheme on 30th October.
The Government of India included exports of cotton fabrics (both woven and knitted) and made-ups to leading markets, which included African markets in the MEIS. As per the agreement of WTO (World Trade Organization), when the export share of a developing country with per capita income below $1000 a year reaches 3.25 percent in any product category for two consecutive years it is deemed to have gained “export competitiveness”.
Under such circumstances it is required for the country to phase out subsidies for the products minimum for eight years from second year of breach. In year 2010, WTO asked India to take into consideration phasing out subsidies for textile and clothing.
The agreement further says that “However, a developing country member shall not increase the level of its export subsidies, and shall eliminate them within a period shorter…when the use of such export subsidies is inconsistent with its development needs.”
Now, the US has flagged export competitiveness issue in textile, saying that India must not give additional subsidy in the phase out session, said an official to Economic Times, on terms of being anonymous. Whereas, an another official of Cotton Textile Export Promotion Council (CTEPC), told ET that India has crossed the export limit and the government is aware of this, but the market is moving slow.
He said “As for the removal of subsidies, we can either gradually phase them out or immediately stop them in 2018 on a pre-decided date.”
