The Hindu Business Line : Ban on apparel quota transfers may go

WITH nearly 50 per cent of apparel exporters under the threat of losing confirmed export orders from the US, the EU and Canada, the Government is likely to roll back the ban on quota transfers announced last week.

Export orders in the pipeline worth over Rs 500 crore would have been impacted by the decision to ban quotas.

This is because exporters, who did not manage quotas under the first-come first-serve (FCFS) basis, would have been unable to ship their cargo since it was now not possible to buy quotas in the open market.

Government sources said that a decision had been taken to lift the ban in a day or two, following a representation from the exporters' community.

"The change of policy in the mid of the year and at the fag end of the quota regime would have definitely upset the smooth flow of exports.

Exporters who have taken orders thinking that they will apply under FCFS for quotas or alternatively buy from the open market would have been severely affected," an industry player said.

The Government had, through an official circular dated July 5, announced a ban on transfer of quotas, citing misuse.

The ban covered the cotton trousers and cotton knit shirts segments for the US market and similar categories for both the EU and Canadian markets.

These together account for 20 per cent of India's export earnings.

According to the Government circular, "... During the current year, the actual utilisation of quotas in most traditionally fast-moving categories has been low though quantities have been allocated far in excess of the annual quota limits imposed by the restraining countries.

"This gives rise to a nagging suspicion that certain vested interests are indulging in increased activity of speculation and hoarding of quotas, thereby creating artificial scarcity, especially in categories where there has traditionally been a good demand."

Prior to the ban, the practice among exporters was that they would sell their unutilised quantities and buy the required categories of quotas from the open market.