Apex industry body, FICCI in its recent representation to Ministry of Textiles and Ministry of Commerce and Industry has said that the textile exports from India are getting affected now as a result of the US legislation for federal procurement stipulating sourcing of raw materials to be from the designated countries only or from domestic suppliers of US.

FICCI has requested the Government of India to take up the issue either bilaterally or multilaterally with the US government to resolve the issue amicably.

The General Services Administration (GSA) of US is responsible for supporting several federal agencies in US with basic functions, including procurement services. Indian textile exporters have reported that the buyers or companies based in the United States (US) supplying to the US government departments and agencies have halted sourcing their raw materials for the textiles industry from countries like India which are not part of the General Services Administration (GSA) Schedule Contract.

Pursuant to the Buy American Act, the U.S. federal acquisition process is based on preferential treatment of U.S.-made products. Manufacturers are considered as U.S. products if manufactured in the United States and the cost of U.S. components is more than 50 percemt of the overall cost of all components. Under certain conditions however, the Buy American Act may be waived.

The Trade Agreements Act of 1979 (TAA) gives the President authority to waive Buy American Act requirements for certain procurements. So far it has been waived for eligible products in acquisitions covered by the WTO Government Procurement Agreement, some relevant free trade agreements (FTA), as well as for least-developed countries.

As per the TAA, all products listed on the GSA Schedule Contract be manufactured or "substantially transformed" in a "designated country". The designated countries, as per the GSA Schedule, consist of:

• World Trade Organization Government Procurement Agreement Countries;
• Countries having Free Trade Agreement with the US;
• Least Developed Countries; and
• Countries based in the Caribbean-Basin

As India does not fit into any of the above criteria, the US-based buyers have stopped their sourcing from Indian textile manufacturers immediately, impacting the order books and the production lines of some of the major textile exporters, it said.