US procurement law hits India’s textile exports

FICCI, in a representation to the Textile Ministry and the Commerce Ministry, requested the government to take up the matter with the US authorities and resolve the issue amicably The Dollar Business Bureau

The US-based buyers have stopped sourcing from Indian textile manufacturers immediately and the move has significantly impacted some of the major textile exporters in India

India’s textile exports are getting affected as a result of a US legislation which stipulates sourcing of raw material from the designated countries or domestic suppliers of the US, an industry body has said. The Federation of Indian Chambers of Commerce and Industry (FICCI), in a representation to the Textile Ministry and the Commerce Ministry, requested the government to take up the matter with the US administration and resolve the issue amicably. The industry body pointed towards the role of the General Services Administration (GSA) in supporting several federal agencies in the US with basic functions including procurement. “Indian textile exporters have reported that the buyers or companies based in the US supplying to the US government departments and agencies have halted sourcing their raw materials for the textiles industry from countries like India which are not part of the General Services Administration (GSA) schedule contract,” FICCI said in its representation to the two ministries. In accordance with the Buy American Act, the US federal acquisition process is based on preferential treatment of US.-made products. The cost of US components is more than 50% of the overall cost of all components. The industry body, however, pointed out certain conditions in which the Buy American Act may be waived. “The Trade Agreements Act of 1979 (TAA) gives the President authority to waive Buy American Act requirements for certain procurements. So far, it has been waived for eligible products in acquisitions covered by the WTO Government Procurement Agreement, some relevant free trade agreements (FTAs), as well as for least-developed countries,” FICCI said. According to the TAA, all products listed on the GSA schedule contract can be manufactured or “substantially transformed” in a “designated country”, which consists of WTO government procurement agreement countries or countries that have FTAs with the US, least developed countries and those based in the Caribbean-Basin. Since India does not fit into any of these criteria, the US-based buyers have stopped sourcing from Indian textile manufacturers immediately and the move has significantly impacted some of the major textile exporters in India.

January 02, 2015 | 5:14pm IST.

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US procurement law hits India’s textile exports

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