DGFT seeks to phase out the export subsidies of textile sector in coming FTP

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.

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However, the industry is of the view that incentives should be withdrawn only in 2018, when the deadline ends.

According to Ajay Sahai, director general, Federation of Indian Export Organization (FIEO) as per the WTO norms India has exceeded the share of textiles in the world trade. But the textile 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.

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