IMPRESSIONS from a Cross-section


Duty drawback rates have marginally increased on several textile items, though with a marginal decrease in apparel items with effect from December 19, 2018. How do you see this step of the government?

There might be negative impact on garment exports
The Indian government has marginally increased duty drawback rates for several textile items, applicable for the year 2018-19. However, there is a marginal decrease in the duty drawback rates of apparel items. <b>Fibre2Fashion</b> takes reactions from few textile-apparel bodies.

Consequent to the significant changes made in the tax structure after the implementation of GST, the textiles and clothing industry has been demanding that the government announce enhanced duty drawback rates.
The duty drawback has been increased from 1.2 per cent to 1.7 per cent for cotton yarn, from 1.3 per cent to 1.6 per cent for cotton fabric, and from 2 per cent to 2.6 per cent for made-ups.

The increase (in duty drawback rates) would help exporters improve their competitiveness, especially in countries with which India has preferential tariff agreements (PTAs). The removal of value cap on most of the items, which has been discouraging value addition, is another welcome feature of the announcement.

However, there is a marginal decrease in the duty drawback rates of apparel items. Considering the continuous fall in garment exports, the industry was hoping for increase in drawback rates. The government could have at least continued the existing rates of duty drawback to sustain the existing level of garment exports. The reduction in drawback rates on garments might have negative impact on exports.

The revised drawback rates will lead to increase in the exports of cotton textiles. There is a significant increase in the drawback rates for cotton made-ups which will encourage export of value-added products like home textiles.

The removal of drawback caps in the case of those export products where the drawback rates are less than 2 per cent will benefit the cotton textiles exporters.

We urge the government to increase the MEIS rate for fabrics from 2 per cent to 4 per cent and also to cover cotton yarn under the MIES and 3 per cent Interest Equalization Scheme so that exports of cotton textiles can achieve its true potential.

The increased rates will provide relief to exporters, but the drawback rates declared now need to be enhanced to at least up to 6 per cent to 7 per cent.

The maximum increase of drawback rates on MMF textiles is by about 1.5 per cent and also the product of nylon filament yarn (dyed) has been added under drawback code as 540203 at the rate 6.7 per cent with a cap of ₹31.2/kg.

We express gratitude to the government for hearing SRTEPC's plea and urge to consider the recommendations forwarded by the SRTEPC. Further upward revision of the drawback rates would help exporters face the competition in the overseas market.

We seek support and cooperation of the industry for more favourable rates in the future.

In the revised list, government has reduced rates for value added readymade garments while improving rates for raw materials like cotton, yarn and fabrics. The rates have been lowered from 2 to 1.8 per cent for few and 1.9 per cent for others.

When the raw material cotton and subsequent processed item cotton yarn drawback rates were enhanced, how can the value-added garment sector and employment generator be neglected?

The new list has totally disappointed the knitwear garment sector in Tiruppur when they were expecting hike in the rates. The revision will not only affect exports but also strengthen the business of competing nations.

TEA has asked the Prime Minister to initiate a consultative process with all stakeholders in the apparel manufacturing segment and arrive at means to compensate exporters by increasing the drawback and ROSL rates so as to arrest further fall in exports.

Published on: 27/12/2018

DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.

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