Says an official circular, dated July 5, "It has been noticed that, during the current year, the actual utilisation of quotas in most of 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."

The circular says that transfers will not be permitted in categories like 340/640 (Men's shirts to US), 347/348 (Men's and Women's trousers), Group-II (other apparels), Cat 4(knitwear), Cat 6(woven trousers), Cat 7(Woven blouses).

The decision to ban transfers assumes significance in that these categories account for over 20 per cent of India's export earnings. Says a Bangalore-based exporter, " Transfer of quotas is particularly helpful as it helps small exporters.

The circular clearly throws a spanner in the works for this category of exporters." This circular comes exactly a week before the quotas under the first-come first serve (FCFS) system are due to be released. The ban on quota transfers comes in the wake of the release of Apparel Export Promotion Council (AEPC) statistics which indicate that readymade garment exports to the US for the first four months of this calendar year declined by six per cent, year on year.

Exports for January to April dropped to $ 755 million. Some analysts say the decline in exports was because the rupee appreciated against the greenback. Says a Mumbai-based exporter, "A major policy decision like this should not have been taken in the middle of the year as it will impact on the exporting community."