Increase of drawback rates by India to impact local exporters

19 Sep '08

1 min read

The Government of India had recently announced the adjustment of drawback rates on some export products from the textile and garment industry. Among them, tax rebate on texturised yarn was raised from 7.6 percent to 9.0 percent and that of texturised fabrics from 6.5 percent to 7.6 percent.

Although the adjustments are nominal, they are likely to impact the Chinese textile industry. SME exporters from China are very poor at quickly adapting to changing market dynamics, so this decision on the part of the Indian government may affect a significant number of exporters.

The main reason being that Chinese and Indian exporters compete for the same slice of the global markets and Indian exporters also have inherent advantages of cheap labour and easy availability of raw materials.

Some experts have mentioned that a few of the orders have been diverted to India from China in the last two years due to a few anti-dumping measures of the US and the EU.

India growth in exports is very much close to that of China in the last two years and according to experts it may not come as surprise if India was to surpass China in a few years time.

Fibre2fashion News Desk - China

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