US accuses India of fresh export subsidies to textile industry

The US has gone to World

Trade Organisation (WTO) accusing India of wrongfully giving fresh export subsidies to its textile industry instead of allotting them as mandated by the WTO. It has also complained to the multilateral body about the country ignoring its requests for bilateral discussions on the issue. Turkey, too, has expressed its unhappiness at the alleged rise in textile exports from India and its industry being pitted against subsidised Indian products. The Indian government has however, rejected the accusations.

The subsidies and countervailing measures agreement of the WTO allows countries with per capita income below $1,000 (about Rs 50,000) to give export subsidies until exports are lower than 3.25 per cent of world trade in that particular commodity. India’s share in the global market for textiles crossed the limit in 2007 and is almost 4 per cent now. Since countries are given eight years to remove subsidies, India has time until 2015 to do so.

But the US is concerned about the additional sops that have been given to the textile sector recently as a part of the government’s efforts to help exporters fight global slowdown. The sops include incentives for exporting textiles under the focus product and focus market schemes where cash subsidies of 2-3 per cent of the export value is given for exports to particular destinations and for exporting identified products. A special market-linked focus products scheme for the readymade garments sector for exporting to the EU and the US announced last year has also been extended till the end of the current fiscal.