NEW DELHI: India will need to restructure its export promotion schemes by making them less dependent on government support to be WTO compliant, commerce secretary Rajeev Kher said on Thursday, adding that several developed countries were raising concerns over India's export promotion schemes.
"We will have to re-engineer (the schemes) in a manner that they conform to international laws to which we are parties," Kher said at the CII Export Summit.
He said the WTO Agreement on Subsidies and Countervailing Measures (ASCM) allows India (which is an Annex VII country) to provide export subsidies as its per capita GDP on nominal terms (on 1990 prices) is still within $1,000.
But Kher added "very soon we will cross this bridge and then we will not have the protection of Annex VII countries, which would mean that all export subsidies will be prohibited". "This means we will have to re-structure or re-engineer our various schemes in a manner that they sustain for a long term," he added.
India cannot provide export subsidies to a sector if the outbound shipments from that particular segment cross 3.5% share in the relevant global market.
Citing the example of textiles, he said the sector is "reported" to have crossed the 3.5% share in the global market at a certain point of time and now India would not be able to provide export subsidies to the sector. "The textiles sector has gone into the area of being competitive as defined by the WTO's ASCM law. Therefore, textiles sector is now not eligible for export subsidies. Now, this is what we have to recognise, sooner than later, new programmes and new schemes will also reach that st ..
The government provides export benefits to sectors under Focus Market Scheme, Focus Product Scheme and Duty Entitlement Pass Book (DEPB).
Kher also said that the free trade agreements (FTAs) signed by India with other countries, widely considered the reason for India's rising imports, needed to be utilised well to gain advantage from these pacts.
"A picture has been painted as if FTAs are nothing but evil. But we have to recognise that this is not the fact.
The important thing is that we have to see how we are utilising these FTAs," Kher said. He, however, added that "we are aware that some FTAs have caused a certain amount of problem like duty inversion. This needs to be addressed and hopefully it will be addressed". India has entered into FTAs with Japan, Singapore, South Korea, Malaysia and Association of Southeast Asian Nations (Asean).
Source : economictimes.indiatimes.com
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