Financial Daily from THE HINDU group of publications
Tuesday, Jun 18, 2002
Industry & Economy
Garment exporters irked at bid to ban quota transfers
CHENNAI, June 17
A PROPOSED ban on the transfer of certain garment quota categories to bring down the premiums in these categories has set sections of the garment exporters into a panic. The ban will be in place until September 20.
In the past three weeks, the quota premiums for fast moving categories like 347- trousers and shorts have been around Rs 350 per piece, which has lead the authorities to believe that there could be hoarding of quotas or other speculative activity.
The letter from the Apparel Export Promotion Council (AEPC) to the Ministry of Textiles has pointed out that "though there's is no spurt in export of these categories, the premiums in some of the categories namely EU 4 & 6 USA 334; 336; 338; 339; 341 & 347/348 are unusually high."
The letter goes on to say that "this indicates that certain vested interests are presently engaged in undesirable speculative activity which may result in genuine exporters, specially manufacturer exporters, not being able to meet their committed export obligations. This would not only cause hardship but may also affect export potential and utilisation of our quota in these categories.
It is thus imperative that action is taken to curb speculation and hoarding of quota so that the availability of quota is ensured in categories where exporters have committed orders from importers is those countries. One possible way of achieving this is to stop the transfers in these categories till September 20 by effecting changes in existing Guidelines of Export Entitlement Quota Policy.''
Exporters said that this in a category like 347 where the annual levels exported from India are already very low the premiums have been shooting up.
According to figures available from the US Customs Web site, the utilisation of 347 quota up to May 2002 has been 76.10 per cent, which is on the higher side exporters said.
In the other categories the utilisation of quotas has been varied, ranging from an utilisation of 21.28 per cent in ladies blouses (336) to 60 per cent utilisation is winter clothing (334).
On the flip side some of the exporters feel that the proposed ban will cool the overheated market and bring down the premiums.
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