Textile Export Quota Policy Simplified

The new long-term quota policy applicable for a three-year period for export of textiles and garments covered under the quota system is also designed to increase the unit value realisation for quota items, a textile ministry notification said.

The policy, applicable for export of textiles and garments in restrained items to the US, EU, Canada, and Norwary, envisages stricter monitoring of quotas, while removing restrictions that may hamper utilisation of quotas.

Under the new policy, the annual level of non quota exports (NQE) has been reduced from 10 per cent to five per cent and the reservation for handloom textiles under the same has been scrapped. Thus, the NQE for non-handloom exporters would in effect come down from seven to five per cent.

 

The three-year policy will come into effect from January 1 next year. According to the new policy, 75 per cent of the quotas will be reserved for past performance entitlements (PPE) with 5 per cent reserved for high-value items. Earlier, the PPE quota was 80 per cent. The new investors entitlement (NIE) is 10 per cent as is the first come first served basis quota. The non-quota entitlement which had been done away with has been brought back with a quota of 5 per cent. The idea is to support non quota exporters and give a boost to non quota exports - which is particularly important in the post Uruguay scenario with the gradual phasing out of the multifibre agreement. The FCFS quota is proposed to be announced at pre determined dates - four times a year to curb speculation.

Several exporters and the Apparel Export Promotion Council (AEPC) had been demanding that the NIE be abolished and the 10 per cent entitlement under it is transferred to a first-come first-served basis. It was being argued that new investments will in any case take place in the individual interests of exporters and it was not necessary to subsidise such investments. The policy will affect garment exports worth Rs 8000 crore. To curb speculation and reduce involvement of quota agents, the textiles ministry will include a new electronic transfer scheme. Ministry sources said this will be introduced as soon as the AEPC, which will monitor it, is ready in terms of infrastructure. The scheme is also expected to make the system more transparent and open to scrutiny. The policy will also benefit the handloom sector which has been given a separate categorisation in textile exports.

Earlier, the policy had a 15 per cent non-quota entitlement (NQE) and 15 per cent for manufacturer exporters entitlement (MEE). About 70 per cent was given on the basis of past performance. Former textiles minister Kamal Nath had abolished both the NQE and MEE and introduced the NIE.

This policy was heavily contested by exporters. Aggri-eved exporters had even taken to court the new quota policy announced by Kamal Nath last year. The manufacturer exporters entitlement (MEE), which was done away with in the last policy, has also not been reintroduced and neither has the NIE been abolished. However, reintroduction of the non-quota entitlement will be welcomed by this category of exporters. Under textiles, the quantities for exports under the ready made good expo-rters entitlement has been incr-eased from the existing 15 per cent to 25 per cent in respect of yarn, and fabrics in three a category for the EU. But it has been retained at 15 per cent for fabrics other than this category.

There is no change in the past performance entitlement (PPE) which is being retained at 55 per cent in all the three categories.

The manufacturers exporters entitlement (MEE) has been retained at the existing level of 15 per cent for the three categories and in respect of powerloom exporters it has been increased from five per cent to 10 per cent in the fabrics category.

In respect of the handloom made up items under the quantitative restraint in the US, it would be allocated at the rate of 55 per cent for past performance entitlement and increased from 35 to 40 per cent in ready made goods exporters entitlement category.

The non-quota exporters entitlement has been reduced from 10 to five per cent. For revalidation of quota beyond September 30, the exporters may now submit post dated cheque in place of emd/bg which would reduce their burden. The FCFS quota would be opened on pre determined dates, ie on the 10th of January, April, July and November.