Garments Exporters Association (GEA) has requested the Government to provide adequate fiscal relief for the garment sector of the textile industry to enable it to face increasing international competition.
GEA has pointed out that garment export trade has suffered month after month decline in exports during the period April- December, 2012, as compared to the corresponding monthly figures of the last fiscal year. He further pointed out that we are still way behind our export target of 18 billion $ for the current fiscal year.
GEA has expressed the hope that finance Minister would favorably consider following recommendations made by the Garments Exporters Association while finalizing the Budget proposals for the year 2013-14.
1. Reduction of Transaction cost
Reduce the transaction cost and grant necessary relief for the garment sector of the Textile Industry to enable it to face increasing international competition because of shrinking demand in the major world apparel markets.
The recent depressing developments in international trade and global financial and economic crisis along with slowdown of US and EU economies have further aggravated the international competition posing serious challenges for the Indian Apparel Industry. Apart from this, there have been a number of domestic factors adversely affecting the competitive strength of Indian Apparel Industry.
2. Hike the Duty Drawback Rates by 5%
It is necessary to hike duty drawback rates by 5 per cent 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 state level taxes.
3. Restoration of 100% Exemption to Exporters under Section 80 HHC of Income Tax
It is the high time to restore 100% exemption to export earnings under Section 80 HHC of Income Tax Act to boost the efforts being made by exporters to overcome the present serious crisis. This would reduce the serious impact of increasing costs as also help making good of losses arising out of high volatility of Indian Rupee.
4. Exemption of Diesel from Duties and Levies for power captive generation
There is continuous and perpetual shortage of power, leading to curtailment of production. This renders it necessary to encourage captive power generation by providing diesel at International prices and exempted from various duties and levies.
5. Abolition of Customs Duty on Import of Textile Machinery and Accessories
Most of our competing economies allow import of textile and garmenting machinery without Customs duty. It is requested that Customs duty on import of textiles machinery and accessories should be abolished in consonance with the policies of our competing econmies.
The special machinery intended to manufacture synthetic garments and also processing of fibres may as well be permitted to be imported under Zero Customs Duty so that more entrepreneurs make investment to manufacture synthetic garments, which has a major market globally.
6. Simplification of Administrative Procedures and Reduction of delays in Customs Clearance.
There is an urgent need to simplify administrative procedures to avoid delays at customs clearance of goods by improving loading and unloading of cargo and infrastructure at ports which quite often takes a heavy toll, causing losses to exporters for failing to adhere to strict time delivery schedule.
7. Realign Service Tax Rate
The Government has allowed all industry Service Tax rates at present 0.15 percent, which needs immediate re-alignment and fixation at 0.50 percent on the FOB Value of Exports, with the expansion of Service Tax to new services. This will be necessary to offset the Service Tax liability from the exporters, which is in keeping up with the policy of the Government to exempt Exporters from taxes, to avoid export of taxes as repeatedly reiterated by the Commerce Ministers from time to time.
8. Allocation of More Funds for TUF Scheme
Technology Upgradation Fund Scheme has been instrumental to improving the technology in textile and garment sector, providing it with necessary strength to offer textiles and garments of better quality at lower costs. The scheme needs to be strengthened by providing more funds to this Scheme by way of with enhanced allocation for the year 2013-2014 to encourage up-gradation of technology to continue increase production and improve productivity of the textile industry in more units.
9. Expedite Enactment and Operalisation of GST
The promised operationalisation of GST has been postponed year after year, which has only prolonged the sufferings of exporting community by way of continued payment of taxes, whose recovery has been an uphill task. This set of problems could be best taken care of by introduction of GST, which, despite the best efforts of the Government, has not seen the light of the day. It is high time to implement GST (Goods & Service Tax), to simplify the present tax structure.
10. Duty-free Import of Yarns and Fabric
A number of our competing economies have allowed their textile and garment factories duty-free import of yarn and fabric in order to reduce the cost of the final products for export purposes. The absence of such facilities to the textile and garment exporters renders our products costlier in international markets, and are therefore edged out of competition. The uniform duties of yarns would be compatible with the recently announced Fibre Policy of the Government of India.
11. Compensation for State Taxes and Levies Till GST is implemented
The Government would be only fulfilling its policy announcements that the exporters would be completely insulated from taxes and levies so as “not to export taxes" by providing for payment of 6% of FOB value of exports, which the exporters are being subjected to, as represented to the Government on several occasions.
12. Pegging Interest Rates to Exporters at 7%
It is strongly recommended that the interest rates for exports, both at pre-shipment and post-shipment levels, should be reduced and capped at 7%. There is also a need to increase Interest rate subvention from 2% to 4% on export credit.
13. Expedite Signing of FTA with EU
With the shrinking export orders from the European Union, we need to be more competitive than others particularly from Least Developed Countries (LDCs), whose garment exports are allowed duty-free entry in European Union without any paying any duties. We, at present, are subjected to pay 12% duty on our exports to EU, before our exports are allowed entry in to EU. This can be substantially reduced if we sign the long pending FTA with the European Union. The earlier we do that, the better it would be for our exports to the European Union.
14. Fix US$ Rate Vis-av-vis Indian Rupee
Very high volatility of Indian rupee had serious unsettling effect on exports. The volatility has become sharp, leaving the exporters in a quandary as to what price they should quote for their exports. In fact, exporters tend to lose in either of appreciation or depreciation of Indian Rupee. GEA recommends that the value of US dollar vis-a-vis Indian Rupee should be fixed for exporters, so that they do not suffer on account of volatility of Indian rupee, on which exporters have no control.
15. Removal of Excise Duty on Indian Branded Garments
The Excise duty on branded garments was imposed at the rate of 12%, which did impact the garment producers and exporters, selling their products within the country. The situation has become much worse in as much as the concession recently extended to Bangladesh garments by way of duty-free exports to India, has proved to be double whammy.
Not only the Bangladeshi garments are generally cheaper than Indian garments, but their imports in India without paying any duty has given them a high price edge, upsetting the level playing field for Indian garments. There is no justification whatsoever to keep high Excise duty on Indian garments, since Bangladeshi garments are allowed duty-free entry into the country. The Excise duty on Indian branded garments should be withdrawn immediately.
Source:
http://www.fibre2fashion.com/news/apparel-news/newsdetails.aspx?news_id=120160
