Textile exports hit by delay in release of duty drawback
April 21, 2014 - India
A large number of textiles exporters are facing a huge financial crunch due to substantial delay in getting duty drawback since the last five months from all the major ports.
According to Shri Manikam Ramaswami ,Chairman, “The Cotton Textiles Export promotion Council ( TEXPROCIL), exporters have been requesting the Customs to release the duty drawback amounts to them, as it is a refund of duties and taxes incurred at the inputs stage on export products. The delay is mainly attributed to non-availability of funds with the Customs.”
Drawback claims remain pending since September 2013 despite persistent follow up efforts made by the exporters, thereby, adversely affecting cash flows. “Textile industry typically operates between 3 to 5% net profit and delay in receiving the drawback amount badly impacts the industry due to funds shortage”, pointed out the Chairman, TEXPROCIL.
Expressing concern over the delay, Shri Manikam Ramaswami stated that “Textiles exports are getting impacted due to the Govt’s interest free borrowings from the Industry which exceeds the industry’s annual profit”.
“Ideally ,duty drawbacks should be released in two weeks after exports as the textiles mills operate at 50% to 75% of exports on total turnover and if the drawback claims remain pending just because of Custom’s collection target, then it is a serious issue and should be addressed at the earliest”, according to Shri Ramaswami.