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Policy decision pulls rug from under feet of textile sector
Apr '09
South Africa is contemplating announcing a comprehensive revival package for the benefit of the textile and clothing industry. However, in the interim it has let the most crucial incentive in its most important textile development programme policy to lapse.

This programme which offers sops and incentives for exports from the textile and apparel sector could also severely hurt the economy of its neighbour; Lesotho which has a thriving garment manufacturing base and is closely entwined with the economy of South Africa.

Under the key incentive, which stands withdrawn, exporters could import clothing against their exports for which they were issued rebate certificates, which could again be sold off to a apparel retailer or importer if the exporter was not interested in importing apparels.

This clause in the policy found many takers, who did not wish to import clothing. But now withdrawal of this benefit to the exporters from the textile sector has turned the whole textile developmental programme in to a toothless tiger.

Lesotho which exports 90 percent of its clothing output is expected to face the maximum impact of this policy change decision, as many companies are solely dependant on this scheme to run their export operations profitably ever since the scheme was announced.

Experts have derided this decision of the government and called it arbitrary and akin to pulling the rug from under the exporter's feet and said that the government should have kept this incentive scheme operational, till its new textile policy is framed.

They also fear that withdrawal of this key incentive will have far reaching consequences on the textile and garment industry in South Africa and neighbours like Lesotho, Swaziland etc and fear that it will make operations unviable and lead to mass unemployment in the sector.

Fibre2fashion News Desk - India

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