The proposed incentives are being discussed at a time when the European Union’s proposed Carbon Border Adjustment Mechanism can see higher tariff on Indian goods.
Textile exporters may soon get a fresh set of incentives to expand their business in European and other markets, according to proposals being considered at the commerce ministry.
Textile ministry officials were in talks with the commerce ministry to finalize the incentives, they told a parliamentary committee last week.
“These incentives, if and when they come, will go a long way in helping Indian textile firms enter the European markets, which currently slap high levy on Indian exports,” a parliamentarian involved in the discussion said on condition of anonymity. “The proposed incentives will be aimed to offset these levies.”
While the rate of incentive is still being debated, it would offset the proposed carbon tax of the European Union and a few other levies, officials said, declining to be named.
The proposed incentives are being discussed at a time when the European Union’s proposed Carbon Border Adjustment Mechanism can see higher tariff on Indian goods. New Delhi is opposed to the proposed levy as it might make it more difficult for Indian companies to compete against China and other manufacturing hubs.
Europe is India’s third-largest export destination; the country exported goods worth $41.36 billion to the continent in 2020-21, official data show.
India does not have free trade agreements with the European bloc and the US, but have entered into such pacts with Mexico and the United Arab Emirates. “The two countries are also seen as potential launch pad for Indian exports to the Western countries,” said an official.
New Delhi and Abu Dhabi agreed on free trade last month. India’s major exports to the emirates include refined petroleum products, minerals, cereals, sugar, fruits, vegetables, tea, meat, seafood, textiles, engineering, machinery products, and chemicals. India imports petroleum and petroleum products, precious metals, stones, jewellery, minerals, chemicals and wood products from the West Asian country.