GEA Has Sought Five Percent Increase in Duty Drawback Rate

The New Delhi-based Garment Exporters Association (GEA) has sought five percent increase in duty drawback rate and capping of interest rate at seven percent, in its recommendations sent to the Ministry of Textiles, Government of India.

In its representation to the Ministry of Textiles, the Garment Exporters Association said the textile industry in general and garment exporters in particular are facing serious challenges because of worldwide recessionary trends and low unit value realization from overseas markets.

In a letter addressed to Mr. Santosh Kumar Gangwar, Minister of State for Textiles, GEA president Rakesh Vaid said over 95 percent of garment exporters belong to the micro, small and medium enterprise (MSME) sector and it would be in the interest of the Government to create policies that would kindle the spirit for growth in these entrepreneurs.

The GEA suggested few important key policy initiatives which it would like the Government to consider while finalizing the Budget proposals, Foreign Trade Policy and Labour reforms.

“It is necessary to hike duty drawback rates by five percent by increasing the scope and coverage of duty drawback scheme so as to ensure full reimbursement of excise duties, custom duties, education cess and various other Central and  state level taxes,” the letter said.

Secondly, GEA recommended that the interest rates for exports, both at pre-shipment and post-shipment levels, be reduced and capped at seven percent. There is also a need to increase Interest rate subvention from 2% to 4% on export credit, it added.

“The interest rate for export credit should be lowered substantially as high interest rate increases production as well as transaction cost of exporters.”

GEA also sought exemption of diesel from duties and levies for power captive generation, abolition of customs duty on import of textile machinery and equipment, simplification of administrative procedures and reduction of delays at the customs clearance, expediting enactment and implementation of the Goods and Service Tax (GST), and allocation of more funds for the Technology Upgradation Fund Scheme (TUFS).

“Import of cotton, synthetic yarn and blended fabrics should be permitted without license at fixed custom duty rate, equivalent to all industry rates of duty drawback,” Mr. Vaid said.

“The Government should also provide 5 percent duty credit scrip for import of fabric on actual user basis for readymade garment export,” he added.

Finally, the GEA sought simplification of the Focus Products and Focus Market Scheme, increased allocation under Market Development Assistance (MDA) and Market Access Initiative (MAI), revision of labour laws to improve labour productivity.