Washington argues that New Delhi no longer qualifies to give concessions for textile exporters under the World Trade Organisation (WTO) rules as it attained export competitiveness in the textile sector eight years back. But India has decided to continue with export sops for the sector in the new fiscal and, probably, the following two years as well.
India’s textile and garments sector employ over 35 million people and accounts for over 12% of its total exports. The export subsidies offered by India for Textile and Clothing are under certain heads such as the Focus Market Scheme, Focus Product Scheme (FPS), market-linked FPS, Export Promotion Capital Goods Scheme, interest subvention on pre- and post-shipment export credit as well as tax breaks for special economic zones.
As India attained export competitiveness in the textile sector in 2008-09 and as per the threshold set by the World Trade Organization (WTO), it has to phase out the export subsidies provided to the sector by 2018.
The Directorate General of Foreign Trade (DGFT) department has prepared made a case in writing to the department of revenue asking it to not provide incentive to the textile sector in upcoming foreign trade policy (FTP) which is likely to be announced next month, as India has reached the export competitiveness in the sector.
