The US has requested that the World Trade Organization (WTO) examines whether Indian textiles and apparel exports are within the threshold that exempts some poor nations from strict rules that ban the provision of export subsidies.
India would not be allowed to benefit from the carve-out if WTO analysts determine that products have reached "export competitiveness", equalling 3.25% share of world trade for two consecutive years.

Should the WTO calculations - going back to 1996 - side with the US submission, India would be obliged to phase-out any export subsidies over a period of eight years.

Cass Johnson, president of the US National Council of Textile Organizations (NCTO), said the most recent export subsidy issue with India was the creation of a 2% rebate for garment exports.

"This was imposed in October 2009 but was made retroactive to 2008," he said. "2% can mean the difference in a sale and our yarns and fabric go into clothes from the CAFTA and NAFTA region that compete with India head on."

The last request by the US for an evaluation by the WTO of certain Indian textiles and apparel products was made in 2003.