Restriction on EPCG scheme will hit Indian textile sector

14 Aug '12

2 min read

If second-hand capital good imports under the Export Promotion of Capital Goods (EPCG) scheme are subjected to any restrictions, it would badly hit India’s textile industry, according to the Federation of Indian Export Organizations (FIEO).

M Rafeeque Ahmed, FIEO President, said if any restriction is imposed on EPCG scheme, it would adversely impact the country’s textile industry, which imports used capital goods in bulk, and is already hit by the global economic slump.

Mr. Ahmed was commenting on the media reports that the Central Government was mulling on regulations to restrict imports of second-hand capital goods, and on withdrawing the benefits extended under the EPCG on import of used capital goods.

The FIEO President said that proper anti-dumping duty and protective duty mechanisms are already in place to reverse the adverse effect that bulk import of these commodities can have on the domestic industry.

Irrespective of the duty-rate applicable, the existing EPCG scheme allows a domestic producer to import second-hand capital goods, like machinery, tools and equipments, by paying only three percent customs duty.

Domestic capital goods industry players are for long seeking such regulatory measures. Meanwhile, the industry is also in favour of setting up a single port of entry for keeping a check on the age of used equipments being imported in the country.

The demand once again came to the forefront, following release of the IIP data, which indicated a sharp 27.9 percent fall in domestic production of capital goods during June this year.

Over the last few years, there has been a rise in imports of used capital goods, which as per the estimates, have risen from 2003-04’s US$ 6.5 billion to about US$ 40 billion at present.

Fibre2fashion News Desk - India

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