The Cotton Textiles Export Promotion Council (TEXPROCIL) understands that the Government of India is considering imposition of Cess on exports of Cotton Yarn & withdrawing the benefit under the Duty Exemption Pass Book (DEPB) Scheme.
Shri Velayutham, Chairman-Texprocil pointed out that any tax on exports was not the solution for the present problems being faced by the Industry because of higher prices of Cotton Yarn which has impacted the downstream segments of the textile economy.
He pointed out that exports of Cotton Yarn had been showing declining trends and were not contributing to any slow down in the downsteam garment sector. Infact prices of Cotton Yarn had increased during recent months mainly on account of an increase in raw material cost by 26% during the last one year and manufacturing costs mainly Power & Labour costs by 28% and over 66% respectively. The acute Power shortages in Andhra Pradesh & Tamil Nadu have also disrupted the production schedules in the spinning industry. While the spinning sector passed on the increased cost to the downstream sector, the value added Garments and Home Textile sector have been unable to raise their prices with their overseas customers commensurate with the rising costs, causing deep concern all around.
In view of these developments Texprocil suggests that the Government should consider giving additional benefits to the downstream Garment & Home Textile sectors so that they can tide over the temporary crisis rather than seek imposition of a tax on exports of Cotton Yarn.
Levying of any tax on exports of Cotton Yarn at this juncture, Shri Velayutham said, will not only adversely affect India's export efforts as they seek to come out of the recessionary conditions but also deter investments in capacity expansion which is much needed to address the increase in consumption in the domestic market on account of the inclusive policies of the UPA Government.
Shri Velayutham appealed to the Government to reconsider its decision in the larger interest of the manufacturing sector in India.
Cotton Textiles Export Promotion Council (TEXPROCIL)