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Textile & clothing sector bags new incentives

27
Jan '10
In order to boost its crumbling textile and clothing sector exports, the South African government will shortly announce a new list of 10 textile and garment product categories which will be eligible for duty credit certificates.

The industry which has been hit by a string of closures and thousands of job-losses has woken the government to announce new incentives to help avoid workers lose more jobs, since it is a labour intensive industry.

The domestic and export textile and clothing sector has witnessed many challenges in the recent past, which include a deluge of cheap and mass produced apparels from Asia, illegal imports and inefficiencies in the production system.

Earlier in December 2008, the government had placed restrictions on the duty credit certificate scheme over allegations of abuse. The scheme entails duty-free imports of key raw-materials to be used for manufacturing products meant for exports.

It was learnt that export trading companies were hiving of the duty credit certificate incentives to domestic textile and apparel companies, other than which it was also not compliant with World Trade Organisation (WTO) rules.

Director in the Department of Trade and Industry for African multilateral economic relations, Mr Xolelwa Mlumbi-Peter said that the 10 products were all input items such as fabrics and yarn and did not include any finished items.

He added by saying that the 10 products on which consensus could be reached, care has been taken to ensure that the duty credit certificates do not undermine production within the customs union.

The scheme which anyway was up for closure in March 2010, in its first version covered 107 product categories and used to cost the government about R550 million annually. The government was contemplating a replacement in the form of a production incentive.

Fibre2fashion News Desk - India


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