Despite mounting pressure from the US to do away with incentives for textile exporters, India has decided to continue giving sops to textile exporters this fiscal. This comes as a major relief to exporters. Reminding India of its export competitiveness in the textile segment that was attained eight years ago, as per the rules of the World Trade Organisation (WTO), US India no longer qualifies to give such concessions. But India has stuck to its stand as the government does not feel compelled to withdraw textile export incentives while announcing the forthcoming Budget or the Foreign Trade Policy.

Meanwhile, Commerce and Textile Ministries have started working on alternative schemes that are amenable to WTO, so that export sops for the sector can be replaced. As per sources, the US has been claiming that India needs to stop export sops for the textiles sector from 2015 but the Ministry believes in sticking to its deadline of phase-out period that ends in 2018. The sops to be phased out include focus product and focus market schemes targeted at incentivized markets, the EPCG scheme and the interest subvention scheme.

India argues that the phase-out period ends in 2018 since the WTO undertook a calculation of India’s world trade share only in 2011, and determined that it had retained competitiveness on the basis of data of 2009-10. As per WTO statistics, India’s share in world trade for textile and clothing was 4.66 per cent in 2013 with exports at $37 billion.