Apparel exporters have demanded an increase in the duty draw back rate
Apparel exporters have demanded an increase in the duty draw back rate to 14.64% to fight the rapid decline in order from foreign retailers, many of whom are facing bankruptcy and have closed hundreds of stores.
By sanjeev, ET Bureau |
New Delhi: Apparel exporters have demanded an increase in the duty draw back rate to 14.64% to fight the rapid decline in order from foreign retailers, many of whom are facing bankruptcy and have closed hundreds of stores as much of industrially advanced economies has slid into recession.
Duty drawback rate is the per centage of total value of exports, which exporters get back as soon the shipment is sent. This is a refund of all duties paid by exporters on raw materials for apparel products, which exporters claim back from the government as exporters are expected to have a level playing field with exporters from other
countries.
"Serve medicine while the patient is still alive," Gokaldas Exports MD Rajendra Hinduja demanded from the government, explaining that the situation in the apparel sector may worsen if government delayed relief to the sector, as orders were fast shrinking and lakhs of employees were being laid off. Bangalore-based Gokaldas Exports is India's biggest apparel exporter and employs around 50,000 people.
Apparel Export Prmotion Council (AEPC) estimates that around 5 lakh jobs have been lost in the past six months. Textile hubs of Tirupur, Noida and Gurgaon have been badly affected with several factories getting closed. According to AEPC, apparel export declined 0.2% between April and November 2008, compared to the same period in the
perevious year. AEPC chairman Rakesh Vaid said apparel exports may touch only $8.78 billion in the current fiscal, 24% less than the target of $11.62 billion and 9.3% down from 2007.
"India is clearly losing its competitive edge in global markets," said Mr Vaid. Even as exports from India have declined, Bangladesh, Vietnam and Indonesia have been able to increase their market share. Mr Vaid says lower labour cost and higher government incentives have kept neighbouring countries in better health than India. "India doesn't
AEPC has demanded the duty drawback rates be increased to 14.64% from the current 8.8% for cotton apparel, 9.8% for blended garments and 10.5% for synthetic garments.
Duty drawback rate is the per centage of total value of exports, which exporters get back as soon the shipment is sent. This is a refund of all duties paid by exporters on raw materials for apparel products, which exporters claim back from the government as exporters are expected to have a level playing field with exporters from other
countries.
"Serve medicine while the patient is still alive," Gokaldas Exports MD Rajendra Hinduja demanded from the government, explaining that the situation in the apparel sector may worsen if government delayed relief to the sector, as orders were fast shrinking and lakhs of employees were being laid off. Bangalore-based Gokaldas Exports is India's biggest apparel exporter and employs around 50,000 people.
Apparel Export Prmotion Council (AEPC) estimates that around 5 lakh jobs have been lost in the past six months. Textile hubs of Tirupur, Noida and Gurgaon have been badly affected with several factories getting closed. According to AEPC, apparel export declined 0.2% between April and November 2008, compared to the same period in the
perevious year. AEPC chairman Rakesh Vaid said apparel exports may touch only $8.78 billion in the current fiscal, 24% less than the target of $11.62 billion and 9.3% down from 2007.
"India is clearly losing its competitive edge in global markets," said Mr Vaid. Even as exports from India have declined, Bangladesh, Vietnam and Indonesia have been able to increase their market share. Mr Vaid says lower labour cost and higher government incentives have kept neighbouring countries in better health than India. "India doesn't
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produce as cheap a product as Bangledesh or Vietnam and supplies to several mid-market and high-end retailers, who are much worse hit than value retailers such as Wal-Mart. Retailers are rushing to low-cost countries in the downturn, reducing orders to India," Mr Vaid said.AEPC has demanded the duty drawback rates be increased to 14.64% from the current 8.8% for cotton apparel, 9.8% for blended garments and 10.5% for synthetic garments.
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