Duty drawback team to meet apparel exporters

BANGALORE: The expert committee constituted by the Union government to examine the issue of duty-drawbacks will meet apparel exporters next week. The team, which includes former Union textile secretary SB Mohapatra, would meet exporters in Chennai, Bangalore and Tirupur. The three centres together account for over $3 billion of apparel exports.

The meeting comes at a time when exporters have been demanding a hike in the drawback rates. Apparel exporters are hoping that a hike in the duty-drawback rates would be acceded to by the Union government.

Drawback is a refund of duties by the government for import of raw material/inputs by exporters. The idea behind drawbacks is to ensure that products from India are competitive globally. The issue of drawbacks became significant after the additional doses of taxation like service tax and value added tax (VAT).

To make matters worse, the upward movement of the rupee against the dollar has meant that the realisation for most apparel exporters is down at least 10% on a year-on-year basis. Over 60% of India’s apparel exports are bound for the US and with the greenback depreciating against major currencies. the going is expected to get tougher for apparel exporters in India.

Incidentally, the history of drawbacks in the country is a chequered one, what with the rates coming down from a high 11% to the current 7% of the cost of imports, subject to a maximum of Rs 38 for outerwear garments and Rs 30 for trousers.

“At the current rate of 7%, it is clear that drawbacks don’t provide any kind of financial support to the exporters. A marginal hike in drawback rates can go a long way in helping us,” said a Bangalore-based exporter.