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Interest subvention & Duty Drawback must for textile sector
25 Aug '08
2 min read
The Textile Industry is the only segment in manufacturing that could provide large number of jobs to uneducated and unemployed people displaced from agriculture. It is calculated by CITI that Textile Industry can provide jobs to 32 laborers to generate Rs1 Crore worth of production.
In 2007~2008, textile industry suffered a lot & many units closed down due to rupee appreciation. In considering rupee appreciation, government announced relief packages by the way of Interest Subvention. The interest subvention package was announced up to March 2009. However, suddenly government announced that the interest subvention will be removed from 1st of Oct 2008, which will be very much painful to textile industry.
In news, published by the national media, it was reported that a three member committee for formulating the duty drawback rates recommended to the ministry to LOWER DUTY DRAWBACK RATES, which is also shocking news for textile industry.
Even though Dollar is appreciating against Rupee, textile industry is facing huge problems from Jan 08 because of more than 30% increase in Yarn Price, more than 30% increase in dyes and chemicals, more than 20% increase in transportation cost, more than 20% increase in labor charges & high inflation.
The textile industry is now facing very hard times to manage their production costs & to obtain new contracts with customers.
Indian textile units are unable to compete with other competitors like China & Pakistan. The neighboring countries like China & Pakistan announced several relief packages to safeguard the textile units from rising production costs. They are quoting lower prices because they enjoy several benefits from government.
On the other hand, in India several textile units closed & several textile units have become sick units. Many thousands of units are surviving in their business solely on benefits from government like Interest subvention & Duty Drawback. In this situation the reduced drawback & removal of interest subvention will have a big impact on the survival of the textile industry.
Hence, Karur Exporters Association has requested the finance minister of India to consider the below relief packages which will be very much helpful to safe guard the textile industry.
• Increased Duty Drawback Rates.
• Interest Subvention of 4% at least till March 2010.
• 100% removal of Service Tax for textile units on all heads.
In 2007~2008, textile industry suffered a lot & many units closed down due to rupee appreciation. In considering rupee appreciation, government announced relief packages by the way of Interest Subvention. The interest subvention package was announced up to March 2009. However, suddenly government announced that the interest subvention will be removed from 1st of Oct 2008, which will be very much painful to textile industry.
In news, published by the national media, it was reported that a three member committee for formulating the duty drawback rates recommended to the ministry to LOWER DUTY DRAWBACK RATES, which is also shocking news for textile industry.
Even though Dollar is appreciating against Rupee, textile industry is facing huge problems from Jan 08 because of more than 30% increase in Yarn Price, more than 30% increase in dyes and chemicals, more than 20% increase in transportation cost, more than 20% increase in labor charges & high inflation.
The textile industry is now facing very hard times to manage their production costs & to obtain new contracts with customers.
Indian textile units are unable to compete with other competitors like China & Pakistan. The neighboring countries like China & Pakistan announced several relief packages to safeguard the textile units from rising production costs. They are quoting lower prices because they enjoy several benefits from government.
On the other hand, in India several textile units closed & several textile units have become sick units. Many thousands of units are surviving in their business solely on benefits from government like Interest subvention & Duty Drawback. In this situation the reduced drawback & removal of interest subvention will have a big impact on the survival of the textile industry.
Hence, Karur Exporters Association has requested the finance minister of India to consider the below relief packages which will be very much helpful to safe guard the textile industry.
• Increased Duty Drawback Rates.
• Interest Subvention of 4% at least till March 2010.
• 100% removal of Service Tax for textile units on all heads.
Karur Exporters Association
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