It pointed out that on the back of TPP discussions, Vietnam is investing in substantial capacities for yarn and fabric manufacturing to bolster their value chain to support and enhance their garment exports.
“The above package should integrate the apparel export benefit to further strengthen the textile value chain. While we appreciate that government is considering compensation for the State taxes suffered by the garment exporters, it is important to appreciate the highest embedded State taxes are at the fabric stage due to complex and involved manufacturing process. Garment exporters have been given special dispensation for duty-free import of fabric and still allowing drawback benefit on the residual value after deducting the import of fabric,” the release said.
CITI recommended that in the interest of maintaining and strengthening the textile value chain, and Make-in-India initiative, the garment exporters be encouraged to source cotton fabric and other fabrics that are manufactured in India. The textile manufacturers would be able to avail the benefits under deemed export scheme, which would make them eligible for benefits of duty-drawback scheme.
“It would indeed be a win-win situation for apparel and textile manufacturers, working together, contributing to employment and retaining value addition within the country. It is also suggested that some of the benefits such as over-time, fixed time employment scheme be extended to the full textile value chain. If the scheme can be modified to strengthen the value chain, to eliminate taxes and support productivity improvement, the ultimate outcome would be far superior than expected,” CITI said. (SH)
Fibre2Fashion News Desk – India
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