'Textile sector no longer eligible for export subsidies'

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Saurabh Gupta | 25 Feb, 2014
Textile sector is no longer eligible for export subsidies as it has reached the export competitiveness in global market share, informed Rajeev Kher, Commerce Secretary in New Delhi recently.

"The textile sector in India is no longer eligible for export subsidies as it has become competitive. Article 27.6 of WTO ASCM agreement suggests to phase out subsidies for product, which has reached export competitiveness," Kher said at the 4th CII Export Summit 2014 held in New Delhi.

He said, "The textile sector is reported to have crossed 3.5 percent share in the global market on a certain point of time then therefore the textile sector has gone into the area of globally competitive as defined by WTO Law. And so Indian textile sector is not now eligible for export subsidy. Sooner or later we see more sectors reaching to that phase."

A product is called competitive when its share reaches at least 3.25 percent in world trade for two consecutive calendar years.

"We have to move out of a purely incentive based export model to a competitiveness based export model," said Kher.

Highlighting that export subsidy is not a long term solution, Kher informed that the benefits that India enjoys at present under Annex VII of the WTO Agreement on Subsidies and Countervailing Measures (ASCM) may soon come to an end.

"The WTO prohibits the use of export subsidies on manufactured products as a general rule, but the countries which are listed in Annex VII of the ASCM, are exempted from the prohibition. This exemption is available until GNP per capita of a country reaches USD 1,000 in constant 1990 dollars for three consecutive years," he added.

He also said that export today is an important tool for economic development. To enhance India's exports he emphasized the importance of promoting both 'Brand India' and 'Indian Brands'.