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Centre examining problems of garment exporters
Jul '16
Job working units in Tirupur knitwear cluster are hoping that their difficulties in availing duty benefits under Export Promotion Capital Goods (EPCG) scheme for machinery import, may be addressed soon.

The Union Government has started examining the issues related to problems they are facing, The Hindu has reported.

According to the report, the problems for the garment industry started subsequent to an amendment in the Foreign Trade Policy that came into effect from July 1 last year, mandating the job working units in printing, dyeing and knitting, and other segments to establish a direct link between machinery imported and the finished goods exported.

In clusters such as Tirupur, vertical integration of production capacities was not much and the units were spread out across the cluster, doing job work.

In his petition to the Government, S. Dhananjayan, a consultant and chartered accountant in Coimbatore, had pointed out that the said amendment had mandated the EPCG license holder to show documents such as copy of agreement entered between the license holder and the ultimate exporter undertaking to export the goods manufactured, proof of despatching goods from the license holder's factory to the exporter's firm and lorry receipt to show logistical movement, among others, to get the zero duty benefits for machinery import.

“Earlier, the exporter only has to show the job working unit's EPCG license number in the export document to enable the job working unit to get the duty benefits. The new compliance can be followed but the wrong interpretation by the officials concerned is creating a confusion”, Dhananjayan said.

T. R. Srikanth, president of Tirupur Export Knit Printers Association, pointed out that after the amendment came into effect, the duty benefits were denied for many of the costly machines imported in the cluster. (SH)

Fibre2Fashion News Desk – India

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