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Industry & Economy - Readymade Garments

Apparel council resents cut in DEPB rates

G. Srinivasan

New Delhi , Feb.11

THE readymade garment industry is sore over the steep reduction in the rates of Duty Entitlement Pass Book (DEPB) provided to neutralise duty on imported inputs for apparel exporters, following the recent reduction in peak customs duty from 25 to 20 per cent.

In a communication to the Director-General of Foreign Trade (DGFT), the Apparel Export Promotion Council (AEPC) Chairman, Mr A. Sakthivel, has said that consequent to a cut in peak rate of customs duty from 25 to 20 per cent and withdrawal of special additional duty, the garment export industry had thought of no consequential downward fixation of the DEPB rate, even as SAD does not have any impact on fabrics.

He noted that the duty drawback rates were reduced by maximum of one per cent only; on this analogy, the DEPB rates at best should have been modified only to the extent of one per cent i.e, generally by a reduction of 6.66 per cent on existing rates.

On a closer look, the revised DEPB rates notified on February 9 in respect of knitted T-shirts are almost 35 per cent lower than the earlier rates. In the case of other important categories of apparel exports, the reduction is almost 27 per cent.

"Such a drastic reduction would not only affect the on hand orders but also orders worth hundreds of crores of rupees which are to be finalised for the next fashion season," the communication has said.

At a time when the Government is spreading the "feel good factor" by attending to the problems plaguing many segments of the economy, the garment export sector has been left untouched more particularly in the terminal year of quota phase-out.

He said against announced DEPB rates of 11 per cent, the garment industry pleads the rates to be hiked to 14 per cent and another existing rate of 9 per cent to be hiked to 13 per cent to provide the requisite breather to the industry impeded by a host of constraints.

Talking to Business Line, Mr Sakthivel said that at a time when the exporters are braving the harsh impact of a creeping appreciation of the rupee vis--vis dollar, the steep reduction in the DEPB rates available to exporters by way of benefits would erode the viability of export business of this industry, which fetches $6 billion upwards through readymade garments exports in a single year.

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