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Rationalize duties to stimulate MMF textile exports
Feb '10
The global financial meltdown and consequent economic recessions in developed economies have clearly been major factor in India's economic slowdown. Every developing country has suffered to a varying degree. No country including India remained immune to the global economic shock.

To counter the negative fallout, the Government responded by providing three focused fiscal stimulus packages to boost demand and increase expenditure on public projects to create employment.

Despite these initiatives, textile sector, especially the power loom industry still has a long way to recover. This is mainly because of the anomaly in the fiscal structure of excise duty on raw materials.

Exporters of man-made fabrics purchase fabrics from the market through Non-CENVAT routs. Cost of the fabrics bear Excise, State VAT duty paid on yarn which is not compensated.

DEPB only considers the routine Custom Duty paid (without including anti-Dumping Duty). Besides Excise/State duty on capital goods, dyes-chemicals, machinery spare parts, Service Tax, etc. are also not compensated.

If exports of garments and made-ups of synthetic fibres need to grow, the supply of polyester yarn to the manufacturers of the fabrics should be made either at the same cost that of Chinese yarn or preferably lower than Chinese cost.

It is possible for the yarn manufacturers in India to supply the yarn at a cheaper rate than Chinese supplier; because the raw material cost viz. PTA and MEG is cheaper in India by 24% and 15%, respectively than in China.

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Fibre2fashion News Desk - India

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