WTO member countries like the US, the European Union, Turkey, Japan have asked India to phase out export subsidies on textiles and the apparel sectors. WTO says India has crossed the export competitiveness limit (exports reaching 3.25 per cent of world trade) consecutively for two years in these sectors.

The sops that will have to be phased out include the popular Focus Product and Focus Market schemes under which exports to targeted markets are incentivised, the EPCG scheme and the interest subvention scheme for export credit. However, the government has not taken any decision on phasing out of subsidies.

India’s share in world trade for textile and clothing was 4.66 per cent in 2013 with exports worth $37 billion. Textile and clothing exports contribute more than 10 per cent to India’s export basket. They are the fourth largest product group in India’s outbound shipment basket.

As per the WTO, when the share of a developing country in global exports touches 3.25 per cent in any product category for two straight years, thereby gaining export competitiveness, it has to phase out export subsidies for the items eight years from the second year of breach. In case of nations with higher income levels, such subsidies are a strict no-no.

India, however, cites the WTO rule book to insist it has time until January 2018 as the multilateral trade body asked the country to consider phasing out the subsidies for textiles and clothing only in 2010.