US quota leeway boost for textile exporters

The US announcement that all textile shipments exported in 2004 to that country in excess of the agreed quota levels will be permitted entry from February 1, 2005 has thrilled Indian textiles exporters.

The announcement, which pertains to Group II and Category 340 exporters, will add to the upbeat spirit of the sector what with the MultiFibre Agreement being phased out in the next 10 days.

The Group II category includes innerwear, boxer shorts, gloves, mittens and infant diapers, while men shirts and knitwear come under Category 340.

Group II and Category 340 textile exporters to the US ""who belong mostly to Tirupur and Chennai""were anxious as they had exhausted their 100 per cent quota last month. They were, therefore, facing the threat of consignments being shipped back.

Though there is no consolidated data on the value of stranded consignments, it is estimated to between about Rs 20 crore.

The US Committee for the Implementation of Textile Agreements (CITA) has stated that starting from February 1 to 28, 2005, entry will be permitted to goods in an amount equal to five per cent of the applicable 2004 base quota limit.

For each succeeding month, beginning on the first day of the month and extending through the last day of the month, entry will be permitted to goods in an amount equal to five per cent of the applicable base 2004 quota limit until all shipments in excess of the quota limits have been entered.

While the Apparel Export Promotion Council (APEC) and Apparels and Handloom Exporters Association (AHEA) had been urging the Indian government since October to enter into embargo with the US for the two categories quota had exceeded 80 per cent as on September 25, 2004.

A Sakthivel, chairman, APEC, said that the central government has been trying hard to enter into an embargo earlier with the US. On the contrary side the textile exporters consignments of group II and category 340 will have to be in the ports of the US till February paying the demurrage charges.

Ranjit Shah, president, AHEA, pointed out that apparel exporters took advantage of the forward carrying criteria when exports exceeded the allotted quota. It was felt that this will not be possible with the phasing out MFA from January 1, 2005.

In order to regulate the world textile trade, members of WTO had agreed on a MFA. Under MFA each country can export only a specified limit called quota to the advanced countries.