The meeting was just before the finalization of annual supplement to FTP to be announced shortly. Dr. Sakthivel has proposed set of measures to boost the garment exports from the country; which includes detailed road map and changes in policy for duty credit scrip, issues related to overtime, changes in FTP for more making it more inclusive and flexible for garment exporters and manufacturers, recommendations on TUFs, custom duty and service tax. In his proposal Chairman AEPC has asked to allow duty credit scrip @ 5% of garment exports for the export performance in the year 2012 -13, for issuance of duty credit scrip from the year 2013 -14 and onwards.

Chairman thanked Shri Anand Sharma for removing excise duty on Fabric/Readymade garments. Recent increase in the prices of yarn has affected the industry input cost therefore, Chairman AEPC as a measure to protect the value added manufacturers, the cotton yarn should also be permitted to be inported duty free, as in the case of cotton being allowed for yarn manufacturing.

Chairman proposed for encouraging garment exporters to accelerate in venturing manufacturing of garment of fabrics, both for knitwear & woven, which are not widely available in India and issuance of Duty Credit Scrip at the rate of 5% to garment exporters for the exports made from the year 2012-13 onwards in the 12th Five Year Plan Period on Actual User Basis.   The Scrip will be used for offsetting custom duties on the specialty fabrics of textile.The issue of scrip shall be subject to actual user and non-transferable.

Further, Items of import falling in Chapter 50,51,52,53,54,55,56,58,59 & 60.  The inputs sourced under scrip and used or export product would not lead or caused to deduction in permissible Duty Drawback (DBK) claimed as per all Industry DBK Schedule. The item of exports would fall under Chapter 61& 62. With the implementation of this scheme, more domestic fabric manufacturers both for knitwear & woven will come forward and shall start production, he added.

Apparel exports from India are seasonal and primarily cotton based. Workers need to supplement their income to fight inflation and to get decent wage at higher levels.  Chairman AEPC has demanded extra wages for overtime under section 59 of Factories Act 1948 is more than what is prescribed under ILO convention – it should not be more than 125%. 

The cap of 50 hours a quarter should be removed under section 64 of the Factories Act, 1948. In addition Chairman recommended modifications in Section 59- Where a worker works in a factory for more than nine hours in any day or for more than forty-eight hours in any week, he shall, in respect of overtime work, be entitled to wages at the rate of his one-and-one quarter times of the regular rate.