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Tuesday, Jun 04, 2002

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Duty drawback move gladdens handloom goods exporters

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THE changes announced by the Government in all-industry duty drawback (DDB) rates have brought cheers to the exporters of handloom goods as the made-ups and fabrics produced from handlooms have been allowed DDB rates.

The Government has allowed eight per cent for exports of handloom made-ups (dyed or processed) with a cap of Rs 25 per kg. In the case of exporters of handloom fabrics (dyed or processed), the DDB rate fixed is seven per cent of the f.o.b value with a cap of Rs 22 per kg, according to industry sources.

The extension of the DDB for the handloom exports comes in the wake of inclusion of hank yarn, largely consumed by the handloom sector, under the excise regime for the first time in the Union Budget. The DDB rates are fixed based on the costs of inputs that attract fiscal levies such as customs and central excise duties, with a view to offsetting the duty burden on the manufacturers.

While the DDB rates with regard to the cotton grey fabrics or processed fabrics produced by the powerloom sector remained unchanged at 5.5 per cent and six per cent respectively, the DDB rate on the knitted garments has been brought down by half a per cent to 12 per cent of the f.o.b value as against the previous rate of 12.5 per cent.

The rate reduction has upset the cotton knitwear industry with the Tirupur knitwear exporters claiming that any reduction in the rate would entail Indian garments uncompetitive in the world market.

The Tirupur Exporters' Association (TEA), in a communication addressed to the Union Finance Minister, had pointed out that the knitwear exporters and the apparel export promotion council had provided sufficient cost data to show the incidence of import duty components that ranged from 18 to 20 per cent. Yet, the Centre had pruned the DDB for knits. The other competing countries including Bangladesh offer higher export incentives that blunts India's competitiveness, the association argued.

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