Faced with sharp criticism over incentives offered to boost exports, the Textile Ministry is working on an alternate strategy that would be compatible with the World Trade Organisation (WTO) guidelines to appease overseas importers without violating global trade norms.
At present, the Government is offering 2-4 per cent of incentives under the Merchandise Export Incentive Scheme (MEIS) to exporters, in addition to production incentives such as interest subvention and technology upgradation fund scheme (TUFS).
These incentives, however, were challenged by the United States at the WTO. Informed sources said that India, which has attained a $3-trillion economy, does not require external incentives to compete in the global market like countries such as Bangladesh, Vietnam and Pakistan, which have smaller economies. According to industry sources, the WTO has set up a committee to examine the issue and submit a final report, perhaps in a couple of months from now.
The existing export promotion schemes have been extremely useful in increasing exports, especially on account of the various disabilities, including preferential tariffs given to competing countries and high logistic and transaction costs incurred on account of infrastructural deficiencies, etc, suffered by exporters.
"The alternate scheme is set to address three broad areas. Firstly, the alternate scheme should be linked with employment generation. Secondly, it should formalise the economy. And thirdly, the new scheme should be a more acceptable concept than free-on-board (FOB) value. The committee is set to submit its report by next week," said Siddhartha Rajagopal, Executive Director, the Cotton Textile Export Promotion Council (Texprocil).
The idea is to devise schemes that cannot be challenged due to multiple interpretations by countries on the possible benefits being given to exporters.
The world trade in textile and clothing grew in 2017 by 3.96 per cent over the previous year, reaching a level of $756 billion. The aggregate trade is expected to reach $786 billion in the year 2018 at a growth rate of around 3.9 per cent.
Source :- Dailyshippingtimes.com