The Hindu Business Line : Cotton textile producers sore over cut in DEPB rates

THE Commerce Ministry's recent move to lower the duty entitlement pass book (DEPB) rates for textile items has sharpened the divide between the exporters availing the DEPB and those drawing the duty drawback benefits on their exports.

At least a strong section within the textile industry feels that the whole exercise of fixing the rates of duty drawback and the DEPB smacks of manipulation and intense lobbying.

Textile industry sources say that though the two schemes of duty-drawback and the DEPB are essentially intended to neutralise the incidence of excise duty and customs duty on inputs going into export production. It is based on the consideration that the exports should not transport the levies but only the products.

A section of textile producers feel that the `irrational tinkering' of customs as well as the excise tariffs of late had a cascading effect on the DEPB and the drawback rates.

The main grouse of these textile producers, especially those producing cotton textiles, however, is that when there has been no change in the customs duty component, the slashing of the DEPB rate has no justification as the DEPB is related only to customs duty incidence.

But what has hurt these exporters is that the Government is choosing not to make any changes in the drawback rates. This is despite the fact that the larger duty component that is related to the duty drawback rate is the excise duty incidence and recently the excise duty tariff for textiles was lowered and at the same time an excise duty exemption route was also granted for the textile industry.

This being the case, why should the Government allow the duty drawback rate to pass untouched unlike the DEPB rates. They said that even as the Government decided to extend the double whammy of excise duty rate cut and the excise duty exemption route for the textile manufactures, the cotton textile exporters were not given the benefit of any reduction in the customs duty rate for cotton imports. It continued to remain at 10 per cent.

Whereas, the DEPB rate for the yarn exporters (notwithstanding the fact that DEPB is related to customs duty incidence) has been sliced to three per cent from the earlier 6 per cent.

More Stories on : Textiles | Exports & Imports

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page