Speaking on the proposal Chairman AEPC said that, “We have learnt that Ministry of Commerce / Ministry of Textiles is likely to announce certain sops to the garment industry in order to face challenges on global slowdown. I am providing herewith further details of my proposal”
PROPOSAL 1: Cotton yarn be permitted imports without license at flat fixed customs duty rate, equivalent to all industry rate of duty drawback. Exports of finished product made from such imported yarn be allowed at corresponding rate of duty drawback. For example import of cotton yarn be allowed at flat 3% rate(rate of duty drawback) or dyed cotton yarn be allowed at flat rate of 3.5% ( rate of duty drawback).Exports of garments made from such cotton yarn be allowed at drawback of 7.9% on FOB (rate of duty drawback).
PROPOSAL 2: Fabrics be permitted imports without license at flat fixed customs duty rate, equivalent to all industry rate of duty drawback. Exports of finished product made from such imported fabrics are allowed at corresponding rate of duty drawback. For example import of cotton fabrics be allowed at flat rate of 4.5% (rate of duty drawback). Exports of garments made from such cotton fabrics are allowed at drawback of 7.9% on FOB (rate of duty drawback).”
On the issue of price stability in cotton yarn and fabrics, Chairman AEPC proposed that import of cotton yarn and fabrics at fixed customs duty, equivalent to rate of drawback rate, may also be permitted and drawback may be allowed on export of readymade garments manufactured from such imported cotton yarn/fabrics at pre-determined drawback rates, he added.
Dr. Sakthivel further proposed that, :In order to protect the interest of the Government, garment exporters, member of AEPC may be permitted imports of yarn/fabrics maximum to the extent of 25% of their export performance in the preceding year.
Bangladesh, Vietnam and Cambodia do not have raw material of their own and they have achieved phenomenon growth through easy import policy of yarn and fabrics. The current scheme of advance license in the Foreign Trade Policy of our country, although allows duty free import but it is a tedious route and is not used extensively by the exporters. Under the proposal new fabrics / yarns, which are not produced in India will also get manufactured and in times to come even these yarns / fabrics will be produced indigenously substituting imports.”
“Under this proposal the procedural hurdles which are faced by SMEs in obtaining and closing advance licensing route for the imports would automatically get solved at one hand and on the other hand the imports for export manufacturing would be subjected to import duty (nil in the case of advance licensing scheme). This proposal would automatically lead to grant of full duty drawback at the time of value added exports in the shape of garments since inputs in the shape of yarn / fabric are subjected to payment of customs duty.”
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