Proposal To Reduce Quota Premium In Textile Sector

Textile commissioner Subodh Kumar has proposed equal allotment of quotas under the past performance entitlement (PPE) system and the ready goods system (RGS) for 2004 in order to prevent “under-invoicing” by established exporters and to reduce the quota premium. The move is significant as the export quotas under the WTO agreement on textiles and clothing are due to be phased out by the end of next year.

In a communication to textile secretary SB Mohapatra, Mr Kumar has also suggested abolition of the manufacturer-exporters entitlement system (MEE) and reduction in the powerloom export entitlement quota (PEE) as well as new investors’ entitlement system (NIE) quota.

Thus the quota suggested under the PPE and RGE systems is 50 per cent for yarn, 45 per cent for fabrics and mill and powerloom made-ups and 50 per cent for handloom made-ups. Under the current three-year policy (which is due to end by December 31, 2004), the quota for 2003 under PPE is uniform at 55 per cent for all these items. On the other hand, the quota under the RGE system is 30 per cent for yarn, and 15 per cent each for fabrics and mill and powerloom made-ups.

The textile commissioner believes that the changes proposed by him if accepted by the government will result in large quota being available under the PPE and RGE systems for new applicants.