Review of package should be industry friendly - Mr Mehta, CMAI
Mr. Mehta, President, CMAI
The Rs.1,50,000 Crore (35 Billion Dollar) Indian Apparel Industry remains in severe crisis zone as there is nothing to stimulate Production in the Domestic segment and inadequate incentives in the Export Sector, said Mr. Rahul Mehta President, The Clothing Manufacturers Association (CMAI).
The Reforms Package announced by the Government offers no incentives for revival of the Apparel Industry facing mounting costs, shrinking Local and Global Markets thereby compelling to cut Production and Employment.
The 2% Interest Subvention, refund of Service Tax on Services provided by C&F Agents to Exporters, increase in threshold limit for refund of this Tax paid by Exporters on Importing Commission Agents from 2% to 10% of FOB value are undoubtedly welcome measures, but fail to address the problems of the Garment Exporters, Mr. Mehta observed. The Interest Subvention is only on new orders, and only up to March 09 - leaving hardly one Order Cycle, if at all, for such a benefit.
It is also ironical that the release of blocked Funds under TUF, which was already pending from the Government, is being announced as an Incentive !
The crucial unaddressed issues of increase in Drawback and DEPB Rates and increase or removal of value caps and restoration of 4% Interest Subvention to pre-September 2008 levels were vital requirements to stimulate Exports which continue to decline for the third consecutive months with drop of 9.62% in October to 658 Million Dollars as against 728 Million Dollars in the previous year, Mr. Mehta pointed out.
It is alarming that demand shrinkage in US and EU Markets, pressure to cut prices by intense competitive vial Nations armed with higher Export Rebates and incentives like China, Vietnam, Cambodia and Bangladesh would continue to edge out Indian Exporters. Mr. Mehta lamented. In contrast, China has increased its Export Incentives 3 times in the last 6 Months, raising them from 11% to 17%; Pakistan too has announced a R&D Rebate of 6% besides a 2.5% cut in Interest Rates
One has also to note the serious decline in the target set of 11.62 Billion Dollars for 2008-09 by 24% to 8.78 Billion Dollars in a Global Market of 530 Billion Dollars where India aspires to become a 'Major Player', Mr. Mehta said.
Besides, the expected provision of interest free loans for Investment in Duty Free Capital Goods, lower interest rates on working capital, reduction in Import cost of Fabrics and Accessories and cut in Local, State and National Duties, restraints on unbridled Apparel Imports etc required to provide the much needed boost for the Industry have been ignored, Mr. Mehta lamented while urging the promised review to be more 'Industry Friendly' and urgently addressing the issues left unattended.
What is most regrettable, Mr. Mehta added, is that the Apparel Sector is being neglected in spite of the enormous Employment potential, especially for semi skilled and unskilled Workmen, and Women, and conversely, the potential for Employment loss if the Industry gets deeper in to the crisis mode.
Clothing Manufacturers Association of India