The Union Textile Ministry is working on a way to harmonise export incentives with the World Trade Organization (WTO) guidelines. The ministry currently offers incentives of 2 to 4 per cent under the Merchandise Exports from India Scheme (MEIS). In addition, it also offers production incentives such as interest subvention and the Technology Upgradation Fund Scheme. These incentives have been challenged at the WTO by the American government. One contention of critics is that India’s $3 trillion economy is quite unlike those of smaller countries in this region, such as Bangladesh, Vietnam or Pakistan, that require external incentives to compete in global markets. A WTO committee is reportedly examining the issue.
The Cotton Textile Export Promotion Council (Texprocil) under the ministry of commerce has engaged consultancy firm, Ikdhvaj Advisers, to study alternative schemes which could be recommended. A committee has been formed for this whose study will cover the entire value chain in the sector.