India mulls new schemes for jobs, textile clusters

India is mulling over alternative schemes for jobs and manufacturing clusters, especially in textiles and apparel where the country has to phase out subsidies by 2018 end adhering to World Trade Organisation (WTO) regulations, under which India cannot offer export subsidies as it acquired export competitiveness in textiles by crossing the 3.25 per cent share threshold in 2010.

WTO allows developing nations with a per-capita annual gross national income (GNI) below $1,000 at the 1990 exchange rate to provide export incentives to any sector that has a share below 3.25 per cent in global exports. In 2017, WTO notified that India’s GNI was $1,051 in 2013, $1,100 in 2014 and $1,178 in 2015. The deadline for India for ending direct subsidies to textile companies is December 2018.

The Indian Government is exploring new schemes — broader in focus and not just restricted to exports — that would not run afoul of WTO, according to a report in a leading Indian English-language business daily.

It has discussed the idea of expanding the rebate of state levies (RoSL) scheme for textile and garments. Under RoSL, garment exporters get refunds from the central government against all levies paid at the state level. This can now be expanded to include taxes that are still embedded.

Production clusters can also qualify for concessions like those on electricity, the report said quoting an unnamed official. The textile ministry has recommended linking employment generation subsidies to the wage bill as the criteria for the subsidy.