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New duty rules by Indian customs worry garment manufacturers
Sep '08
The domestic ready made garment manufacturers may have to face new hurdles put up by Indian customs, according to which, Nepali exporters will now have to pay customs duty based on the maximum retail price (MRP) instead of the invoice rate. As a result, the shipment of garments has come to a halt.

Fibre2fashion contacted Mr Uday Raj Pandey, Vice President, Garment Association of Nepal (GAN), to learn more about the present state of exports who stated, “As per the trade agreement between India and Nepal there is zero percent trade duty, even the garment sector is free from it. However, since two years, Indian Custom Department has started imposing custom duty on transaction value or Counter Value Duty (CVD).

“We want Indian Customs not to further impose export duty as already there is 4 percent custom duty on cotton garments and 6 percent on Polyester made clothing. From past 10 days the Customs has started imposing duty on MRP and not on FOB or transaction value. Right now garments worth nearly 5 million are lying in custom hassles.”

The MRP is always higher than the invoice rate, the price at which producers deliver the products. The change in the base price has suddenly risen the volume of the duty by two to three times.

While talking about the consequences, Mr Pandey divulged, “Indian importers are likely to opt for other countries like Bangladesh, or they might try to source garments from within the country.”

The exporters are worried as the Indian customs has also said that they would accept the laboratory test results of New Delhi-based quality certifiers only. However, earlier test certificates of Kolkata, Patna and nearby laboratories were also accepted. This new rule will only make delay in the consignment delivery time.

As the demand for denim, corduroy, linen, viscose and polyester garments had increased by manifolds in Indian market, the Nepali garment industry, which was on the verge of collapse, started receiving export orders in bulk from India, helping it to revive once again. Major retailers like Big Bazar, Pantaloon, Peter England and John Players had also started importing garments from Nepal.

However, now the manufacturers of ready to wear garments are looking forward for some relief from the Indian customs for easing the new regulations.

Fibre2fashion News Desk - India

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