New labour rules to hit textile EOUs

MUMBAI: The government is considering a ban on inter-unit job work facility for export-oriented units using polyester filament yarn as raw material.
“Further, it proposes that none of the units making goods out of filament yarn, existing or new, should be permitted to do exports through third party,� a top official told ET. “They have to necessarily export directly.�
These changes have been proposed by the authorities following various large-scale irregularities have been found by the Central excise officials during recent raids on Chiripal and Indo Rama groups along with many other units at Surat and Ahmedabad.
“The facility of duty-free import of polyester yarn for export is being misused and there is massive duty evasion,� said an excise official. Irregularities found ranged from mis-declaration of the goods to fake transport receipt, he added.
“There is a great incentive to misuse the facility of duty-free import or domestic procurement of polyester yarn because of a heavy duty of around 60%,� conceded a ministry official. “In future only such units should be approved which have integrated facilities,� he added.
After conducting raids on Nova Petrochem of Chiripal group as also Indo Rama group, the anti-evasion wing of the excise department conducted raids on at least 10 other export-oriented units at Surat and Silvassa, who were supposed to have been procuring raw materials from these groups on a regular basis.
The recent raids on various units have had their effect and brought down the activity of misuse of the facility for import of duty-free polyester yarn. “This may be temporary, but what is required to be done is to bring down the duty to such a level that encourage the compliance,� said an EoU representative.