The Hindu Business Line : DEPB rates hiked for textiles

AS the global textile trade bids adieu to quota restrictions from January 1, the domestic textile industry's enthusiasm for increased exports to quota-less markets has been somewhat dampened by the Government's move to revise the duty entitlement passbook (DEPB) rates on textile items.

While players in the synthetic, man-made, woollen, silk and blended textiles sector believe that the Government's action would have a positive effect on their export efforts, those in the cotton segment, which accounts for a substantial chunk of textile exports, are an unhappy lot.

The Government said on Friday, "DEPB rates stand enhanced in respect of synthetic, man-made, woollen, silk and blended textile products." It also maintained that it had taken care of the grievances of a large number of exporters and export promotion councils.

Sources said the latest revision of DEPB rates should be viewed against the backdrop of the Government's move in September 2004, when an across-the-board reduction of 45 per cent was made on all textile items in the textile group of the DEPB scheme.

Interestingly, this move came soon after the Union Budget, which did not have any major proposals relating to reduction in customs duties on textile-related items or inputs.

In the wake of trade and industry representation to the Commerce Minister, Mr Kamal Nath, industry sources said the extent of reduction in DEPB rates has now been curtailed to 22.5 per cent in case of man-made and synthetic items. In the case of blends, the extent of reduction has been lowered from 45 per cent to 30 per cent from the pre-September rates.

In effect, the players in the synthetic, man-made and blend segments will get a higher DEPB now compared to the levels they got after the September revision.

In the case of cotton items, the extent of reduction in DEPB rates has been enhanced from 45 per cent in September to 60 per cent.

"It is quite clear that cotton players are going to get lesser DEPB from the entire exercise than what they were getting prior to September. However, the other segments have got relief as the extent of reduction has now been curtailed," industry sources said.

When contacted, the Secretary General of the Indian Cotton Mills Federation, Mr D.K. Nair said, "The latest reduction in DEPB rates for cotton items will have an adverse impact on the possible increase in exports that were expected with the lifting of the quota regime." He said the deepening of reduction in DEPB rates for the cotton segment would harm the export efforts of this sector.

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