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Stimulus packages fail to enthuse apparel exporters
Jan '09
The government has declared two stimulus packages in the last few weeks to boost exports and to tackle the global economic crisis, but a sense of euphoria seems to be missing in the exporter's community. The apparel export industry in particular does not seem to be so happy with the announcements. All the apex apparel associations aver that, apparel exports will fall short of a wide margin of the targeted US $11.6 billion in the current fiscal year (2008-09).

Reacting to the announcement of the second stimulus package, the Chairman, Mr Rakesh Vaid, of the Apparel Export Promotion Council (AEPC), which has more than 6,000 member companies on its rolls said, “The government has done very little to help the $10 billion apparel export sector which employs nearly 3.9 million workers. Lakhs of workers have lost work due to global economic recession.”

“We are in consultation with officials and hope the government will come up with concrete measures soon to revive the textile and readymade garments industry,” he added by saying. Against the set target of $11.6 billion, the apex body of apparel exporters does not expect to cross $8.78 billion in the current fiscal year, compared to $9.69 billion achieved in the previous fiscal year (2007-08).

In response to the first package declared in December, Mr Vaid had said, "We were expecting an increase in duty drawback rates, but there is no mention of it in the package. We have also been demanding income tax exemption for five years to offset the huge losses piling up, but there has been no response.”

Mr Vaid said that the allocation of Rs 1,400 Crore for textile up-gradation fund is what the government owes to the industry. "The allocation which has been pending for many years is for payment of arrears. There is nothing new in it”, he added by saying. On two per cent interest subvention for exporters up to March 2009, Mr Vaid said the move will benefit the sector marginally”

The President of the Clothing Manufacturers Association of India (CMAI), Mr Rahul Mehta gravely said, “The $35 billion 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. 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 cut in production and employment.”

He vehemently said, “In contrast, China has increased its export incentives three times in the last six months, raising them from 11 to 17 percent and Pakistan too has announced a R&D rebate of 6 percent besides a 2.5 percent cut in interest rates.” Mr Mehta lamented by saying that, “armed with higher export rebates and incentives, countries like China, Vietnam, Cambodia and Bangladesh would continue to edge out Indian exporters.”

The reaction of the President of Tirupur Exporters Association (TEA), Mr Sakthivel to the second package was more vehement. He said he was totally disappointed with the second stimulus package and unfortunately the government had not considered requisitions put forth by TEA like, five year income tax holiday, two years moratorium on term loans, exemption from payment of all service and fringe benefit taxes to the apparel exporters.

Among other demands he said the government had not considered increasing duty drawback rate to 12 percent for cotton knitwear garments and provide 7 percent packing credit or in lieu increase interest subvention by 2 percent and increase the total interest subvention to 4 percent.

Fibre2fashion News Desk - India

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