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US threatens India action over subsidies in T&A sector

Indian apparel and textile exporters are on tenterhooks with the US asking India to stop on providing subsidies to apparel and other sectors. As per stipulations when a country crosses a specific threshold, it gets a eight year period of reprieve to phase out subsidies. In 2010, India crossed the threshold in apparel and textile sector after gaining a 3.25 per cent share in the global export market. This means the period of reprieve will come to an end in 2018.

India now plans to challenge the US contention at the WTO. If the decision at the world body goes against India, it would adversely impact India’s apparel and other key exports to the world. The SEZ policy and the MEIS scheme which are applicable to the textile and apparel industry come under this prohibited category. As per norms member countries of WTO can take remedial actions against India for such schemes and policies.

Also, the US in this case has the options of imposing countervailing duty on imports from India, which will result in Indian exporters’ losing their competitiveness in the US textile and apparel market. Competing countries like Bangladesh, Taiwan and Vietnam are likely to benefit from India’s setback.