The MoU was signed here on December 31, 1994 after officials from both sides held discussions on market access for textiles and clothing products.

``India had agreed to bind its tariffs and notify to the World Trade Organisation (WTO) secretariat within 60 days of the date of entry into force of the WTO,'' said an EC director general. ``It has not done that so far.''

She was talking to UNI on condition of anonymity. The EC is executive body of the 15-nation European Union (EU).

While EC officials say India has not respected its commitments under the MoU, Indian authorities maintain that while doing so, it would put the domestic industry into a perilous position.

So in recent years, the country decided to use the Clause 6 of MoU which said: the EC will give favourable consideration to requests which the Indiangovernment might introduce for exceptional flexibilities, in addition to the flexibilities applicable under the bilateral textiles agreement, for any or all of the categories under restraint.

The MoU further said the Indian government will invoke such exceptional flexibilities in the order of carry-over, inter-category transfer and carry-forward to the extent of possibilities existing on the basis of utilisation of quotas.

Moreover, in each quota year, the total amount of exceptional flexibilities will not exceed 2,500 tonnes for any particular textiles category or 3,000 tonnes for any particular clothing category.

In recent years, India used these clauses to notch up its textiles and clothing products on top position of its trade with the EU. These goods now comprise a bulk of the 18.3 billion Euro (about Rs 80,000 crore) two-way trade.

But the problem cropped up late last year when the EC refused to allow its imports under the exceptional flexibility clause of the bilateral agreement on textiles andclothing products. It imposed an embargo on Indian shirts, trousers and dresses and two crore pieces worth Rs 40 crore got stuck at European ports.

While officials of the Apparel Export Promotion Council (AEPC) visited the EC headquarters here to resolve the issue, EC officials refused to budge. ``So far, we have banned items under the non-sensitive categories. If India does not keep its commitments, we will crack on other categories in future,'' said an EC official.

The AEPC operates under the textiles ministry and regulates quota mechanism in India.

Till four days ago, 4.98 lakh t-shirts, 1.62 lakh trousers and 7.46 lakh dresses were still lying at various ports across European countries. The others were either routed back through other countries outside Europe or shipped back to India, only to be re-shipped under 1999 quota.

Portugal and some other EU nations also refused to consider India's request to allow the 1998 shipments by debiting the quantity from the 1999 quota. Instead, Portugal hasquestioned the legal grounds on which the EC signed the MoU with India more than four years ago. The matter is pending with the European Court of Justice.

Now, in a recent letter to EC vice- president Leon Brittan who is visiting India from April 6 to 8, commerce minister Ramakrishna Hegde said the EC should grant exceptional flexibilities unconditionally till the issue is resolved in the court.