Textiles and apparel are India’s fourth-largest export product and the industry is shrinking due to liquidity crunch and lack of demand. The United States, Turkey and the WTO have also requested India to cancel export subsidies for textiles and clothing.
According to the reporter, according to the subsidy and countervailing measures of the WTO agreement, if a developing country (with a per capita annual income of less than US$1,000) accounts for 3.25% of global exports for a certain export product for two consecutive years, then from Export subsidies will be eliminated within eight years starting from the second year. For countries with per capita annual income above US$1,000, there are no export subsidies.
The United States pointed out that India’s textile and clothing exports exceeded 3.25% in 2005, and the proportion was even higher in 2006, so India should begin to cancel export subsidies from January 2015. However, India cited relevant provisions in the WTO to refute, insisting that the elimination would not begin until January 2018, because the multilateral trade organization only began to require India to gradually eliminate export subsidies in 2010.
WTO articles stipulate: “The formation of export competitiveness should be determined by a developing country notifying that its country has reached the level of export competitiveness, or by the WTO accounting of the country’s exports at the request of any member state. ”
India only provides export subsidies under specific frameworks, such as: the FocusMarke, Scheme, FocusProductScheme (FPS), market-linkedFPS and ExportPromotionCapitalGoodsScheme, which are represented by information subsidies for export credits of goods before or after shipment and tax exemptions in special economic zones. .
India’s textile and apparel industry employs more than 3.5 million workers and accounts for more than 12% of the country’s exports.
It is reported that India has always wanted to clarify the definition of “products” and “the gradual elimination of export tariffs at an appropriate period” under WTO regulations. NewDelhi claimed: “Although the export proportion of textiles and clothing as a product category has exceeded the prescribed global share, many specific products under this product category have not yet reached the level of export competitiveness, so India’s approach should be Support.”
However, there is also news that since the new foreign trade policy was implemented from 2015 to 2020, the Ministry of Commerce has realized that the gradual elimination of export subsidies may have to be implemented midway, many before 2018. This is because India wanted to honor its WTO acceptance. At the same time, the Ministry of Commerce also wants to provide incentive subsidies for less competitive textile and clothing products instead of exporting them.
The WTO prohibition is directly related to export subsidies, but it does not prohibit production subsidies. However, production-based subsidies may result in countervailing duties imposed by the importing country to offset the loss caused by imported products being cheaper than domestically produced products.
However, there is also news that because general WTO regulations allow the imposition of import tariffs to neutralize export subsidies, export tax rebate plans for industrial centers are not feasible. But for the technological upgrading of cotton production, financial subsidies are feasible because the subsidies are incentives for production. DK Nair, secretary-general of the Federation of Indian Textile Industry, said: “If India is forced to completely cancel export subsidies in 2015 under national pressure, the textile industry will face many serious problems. Domestic cotton prices in India are still higher than global prices, and manufacturers have no choice but to Transferring the increased costs to consumers suppresses consumer demand.”
Due to reduced demand from China’s high-end consumers, India’s exports of many textile products are under great pressure – India’s cotton yarn exports fell by 16% from April to October compared with before. The growth rate of pure cotton clothing exports is also slowing down.
