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Cut in drawback rates an unfair move - CITI
Sep '08
Reduced duty draw-back rates are set to be put into effect from today and the industry biggies, especially belonging to textiles, have already expressed their discontent.

Mr D K Nair, Secretary General of Confederation of Indian Textile Industry (CITI) told Fibre2fashion, “The draw back rates have been reduced drastically for all textile products. This is a really unfair move by the Government since pressure of international trade is rising rapidly. Countries like China and Pakistan increased export incentives for textile products significantly from August 2008, to help enterprises cope with declining demand in western markets.”

Sources say that now duty drawback rates for ready-made garment sector are between 8.8-10.5 percent.

The new rate is 4 percent for grey cotton yarn and 5 percent for dyed cotton yarn, irrespective of the counts of the yarn. While rate for cotton fabrics is 4.6 percent (grey) and 5.5 percent (dyed), that for denim fabrics is 5.7 percent. Drawback rate for higher quality silk fabrics is 9.8 percent and that for fabrics of noil silk has also been revised downwards.

In the made-up category, the new drawback rate is between 8.2 and 9.5 percent; for hand knotted woollen carpets it is 11 percent, silk carpets is at 14.5 percent and cotton durries is10.5 percent.

Finished leather and lining leather drawback rates stand at 6.3 percent, leather footwear is at 10.5 percent and leather apparel is 9.9 percent.

Brass builder hardware, brass hardware, handicrafts of brass and artware/handicrafts of copper duty drawback rates stand around 15 percent.

Mr Nair, stressed, “Textile and clothing industry of India has been reeling under the pressure of increasing input costs and raw material prices on the one hand, and stagnating or declining price realization for finished goods on the other. This is the time when industry is actually seeking support from the Government. But instead of helping the industry, Government is taking a technical approach to the draw back issue.”

Tirupur Exporters Association (TEA) President, Shri A Sakthivel has also sent a letter to Shri P Chidambaram, Finance Minister, requesting to restore the duty drawback rates to previous level.

He further warned, “This step is bound to impact our exports, condition of manufacturing industries, especially the labour intensive industries like textiles and clothing, inturn affecting the country's economy as a whole.”

Fibre2fashion News Desk - India

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