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NITMA: Nil rate of duty drawback on cotton yarn as unfair
May '10
The Northern India Textile Mills Association (NITMA) President, Mr. Ashish Bagrodia in a press statement issued stated the Government's decision to withdraw duty drawback for cotton yarn is very unfortunate and unfair. This move of the Government is also inequitable as all other export products are eligible for the refund of duties and the sudden withdrawal will have long term implications for the healthy development of the Sector in future.

Mr. Bagrodia pointed out that the Government has unfortunately set a precedent by making the duty drawback rate as nil which was recommended by the High Powered Committee after thoroughly verifying all the incidence of duties suffered by the spinning sector on its inputs. He further said the Committee has recently sought for further details and industry has been demanding for the higher rate as State levies ranging from 4 to 5 per cent and transaction cost ranging from 9 to 12 per cent are not refunded.

Mr. Bagrodia stated that that the Government is itself questioning the rationale of its scheme which is essentially meant for reimbursing central indirect taxes suffered at the input stage in the manufacturing process. The Government had earlier withdrawn 7.67% DEBP on cotton yarn and now suddenly withdrawn duty drawback, the intention of the Government is not understandable as drawback is not an incentive and it is only refund of duties, which is given for all the commodities with an objective of not exporting duties and creating a level playing field in the international market.

Mr. Bagrodia also pointed out that yarn price is determined by market forces depending upon the supply-demand and any move to bring artificial control on the intermediary products will only affect the functioning of the entire textile value chain in the globalize and liberalized environment.

Mr. Ashish Bagrodia further said that the member mills NITMA has recently acceded to the request made by the Union Textile Minister and volunteered themselves to reduce the yarn price in order to help the garmenting sector. Under such a situation, the negative move taken by the Government is very unfortunate for the spinning sector which has been generously extending its help for the growth of the handloom, power loom and garmenting sectors.

He also pointed out that instead of giving additional benefits to the ailing / weak sectors, the move of the Government penalizing the spinning sector will be counterproductive and would totally discourage any further investment into this sector paralyzing the entire textile value chain. Therefore, he appealed to the Government to immediately withdraw the notification and reconsider its decision in the larger interest of export trade.

Northern India Textile Mills Association (NITMA)

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