Sources said the commerce department has started the exercise and various options are being explored even as the government prepares to address American concerns during consultations at WTO. Commerce secretary Rita Teaotia said one option was to move from export incentives, which include refund of taxes, to product-specific subsidies that many countries offer. However, this would entail a massive budgetary outgo. Deliberations are planned over the next few days, although officials said a solution may not be readily found.
A transition to the regime would mean that the government will offer incentives to a few textiles clusters, instead of incentives to all textiles exporters. “This will benefit not just exports but also goods sold in the domestic market and improve quality. But for this, we will need additional funds,” said a government official.
The sources said China was depending on product specific support by setting up SEZs to overcome this problem. A section within the commerce department, which was not too keen on NITI Aayog’s plan for coastal economic zones, now believes that the enclaves could offer an option. The NITI Aayog plan, prepared by former vice-chairman Arvind Panagariya, involved setting up of a zone for textiles and another one for electronics with Andhra Pradesh, Gujarat and Odisha evincing interest.
While the government had been expecting a challenge at WTO for the last few months, it had not begun detailed discussions on a new mechanism to replace the schemes that offered subsidies. The textiles ministry has so far failed to suggest an alternative, although the scheme for the sector — which is WTO non-compliant — is due to expire from January.
Sorce: timesofindia.indiatimes.com