NEW DELHI: The Centre is preparing to wean off textile and clothing exporters from direct subsidy schemes and replace them with indirect benefits as it may not be possible for the Country to push the World Trade Organisation (WTO) deadline for abolishing export sops beyond next year.
“The Commerce and Textile Ministries are already examining alternative schemes that are allowed by the WTO such as ones for quality upgradation and subsidising capital expenditure. However, the changes would happen gradually and there will be no immediate withdrawal of popular schemes like interest subvention or Merchandise Export from India Scheme,” a Government official said recently.
India’s annual exports of textiles and garments are pegged at over $35 billion accounting for about 5 per cent of world trade share.
Two popular export sops enjoyed by textiles and garments producers are the interest subvention scheme, where the Government bears part of the interest burden on loans, and the MEIS scheme where en-cashable scrips are given based on the value of the exports.
“Although direct export sops will be phased out, the Government has no intention of reducing the total support extended to the textiles industry. Schemes of equal value or more will replace the ones that are phased out,” the official said.