The central is planning to replace direct subsidy schemes for textile and clothing exporters with indirect benefits before the World Trade Organisation (WTO) deadline for abolishing such sops. The commerce and textile ministries are already examining alternative schemes meant for quality upgradation and subsidising capital expenditure.

These new schemes which would be of equal value, the existing ones, a government official said, adding that although direct export sops will be phased out, the government has no intention of reducing the total support extended to the Indian textile sector.

Also, these changes would happen gradually and there would not be any immediate withdrawal of popular schemes like Interest Subvention Scheme or Merchandise Export from India Scheme, the official said.

The USA has been pressing India to overhaul its textile export policy since it plans to do away with all forms of export subsidies for the textile sector by 2015.

The USA has argued that the WTO secretariat released calculations showing that India had reached “export competitiveness” in textiles and clothing no later than 2007. However, Indian trade negotiators have counterargued that since the WTO undertook a computation of India’s world trade share after a member’s request only in 2011, and determined that it had retained competitiveness on the basis of 2009-10 data, it can be inferred that the phase-out period would end in 2018.

India’s annual exports of textiles and garments have been pegged at over 35 billion US Dollar accounting for about 5 per cent of world trade share.

Although India has admitted that export sops for the textile sector should be done away by 2018, the official said the government does not want exporters to panic, especially since they are already reeling under the burden of GST. Therefore, the process of phasing out existing schemes will begin gradually by next year, the official said.

–  Apparel and Textile News, Apparel Talk, Indian Apparel