‘US Procurement Law Hits Indian Textile Exports’

Indian textile exporters have reported that the buyers or companies based in the US supplying to their government departments and agencies have halted sourcing raw materials from countries like India, which are not part of the General Services Administration (GSA) Schedule Contract, according to an agency report quoting the Ficci representation.

The GSA is responsible for supporting several federal agencies in the US with basic functions, including procurement services.

Pursuant to the Buy American Act, the US federal acquisition process is based on preferential treatment of US-made products. Manufacturers are considered as US products if manufactured domestically and the cost of local components is more than 50 per cent of the overall cost of all components.

Under certain conditions however, 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 (FTA), as well as for least-developed countries.

As per the TAA, all products listed on the GSA Schedule Contract be manufactured or “substantially transformed” in a “designated country”.

The designated countries, according to the GSA Schedule, consist of WTO Government procurement agreement countries, countries having free trade agreement with the US, least developed countries and countries based in the Caribbean-Basin.

As India does not fit into any of these criteria, the US-based buyers have stopped their sourcing from our textile manufacturers immediately, impacting the order books and the production lines of some of the major exporters, Ficci said