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G. Srinivasan

New Delhi , Nov. 4

INDIA has taken up the issue of anti-subsidy investigation launched against exports of its bed linen for the fifth time by the European Commission by maintaining that the EC proceedings, probing now into subsidies allegedly bestowed on Indian bed linen, suffers from serious legal loopholes.

An official delegation consisting of the Counsellor, Embassy of India, Brussels, Mr N. Chauhan, Chairman, Cotton Textile Export Promotion Council (Texprocil), Mr Siddhartha Rajagopal and Joint Secretary, Ministry of Textiles, Mr K.K. Jalan argued India's viewpoint in Brussels on October 30, 2003, sources in the Government and industry told Business Line here.

Bed Linen from India has been the target of four "back-to-back" EC anti-dumping investigation since 1994, notwithstanding the fact that the WTO has repeatedly ruled these EC proceedings to be violative on what is now an aggregate of eight crucial counts ranging from dumping, injury to developing country provisions, the sources said.

Stating that subsidisation has been erroneously construed and quantified, the Indian side contended that the EC has incorrectly identified schemes that would before long end as well as schemes that fully comply with the canons of the WTO Agreement on Subsidies and Countervailing Measures (ASCM). They cited the case that the Income Tax Exemption Scheme to exporters would be completely abolished from 2004. Besides, the quantification of the extent of subsidies under this scheme was also wrong, as it has computed the benefit to the exporters under the scheme only on the basis of the rate applicable for the first half of the probing period. They have not applied the actual decreasing rate of export tax exemption while estimating the benefit. Besides, the EC has also erroneously quantified subsidies by resorting to the archaic "cost to the Government" approach, rather than the benefit to recipient method.

The sources noted that the EC has also mistakenly sought to countervail the benefits under the Duty Free Replenishment Certificate (DFRC) scheme, which permits replenishing of inputs in the same quantity as used in export products, as permitted under the WTO's ASCM.

Again, India argued that the major proportion (55 per cent) of EC producers was not investigated but only selected a sample from complaining producers, even as the ASCM does not even permit sampling. Moreover, the volume of Indian imports decreased markedly, both in absolute and relative terms, even as EC production and consumption steadily rose. Even for argument sake one is in agreement that the European Union industry has suffered material injury, such injury could not be laid at the door of Indian imports, officials from India contended. Because, India's share in imports of bed linen into the EU has plummeted from 16 per cent in 1997 to 9.7 per cent in the year 2002 in terms of volume and from 14.7 per cent to 8.1 per cent in terms of value during the same period.

By driving developing countries and its exporters into pleading costly review so as to revisit subsidy schemes that would in any case be abolished as from next year, the EC is acting inconsistently with the relevant developing country provisions, India said.

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