The Hindu Business Line : Textile export promotion body worried over DEPB rate cut

THE Textile Export Promotion Council (Texprocil) has reacted sharply to the Government's unprecedented move to slash the DEPB (Duty Entitlement Pass Book) rates for cotton textile products, such as yarn, fabrics and made-ups by a further 15 per cent, surprisingly on the eve of removal of quotas after four decades of protectionism.

In a statement issued today, Mr B.K Patodia, Chairman, Texprocil, expressed shock and dismay at the unfair and unjustified reduction in the rates for the cotton textile sector while at the same time DEPB rates for man-made textile products have been stepped up. He pointed out that `robbing Peter to pay Paul' was not the best way of enunciating policy in a complex and vital sector such as textiles at such a critical juncture.

The DEPB rates, which are intended to neutralize the incidence of basic customs duty on the exports of cotton textile export products, should not have been reduced, as there was no corresponding reduction in the basic customs duty for the items.

Moreover, with issues such as quality, contamination, and non-availability of `extra long staple cottons' remaining unresolved, exporters of cotton textile products such as yarn, fabrics and made-ups were relying on imports of cotton, in a large measure and as such a reduction in the rate of almost 60 per cent from the erstwhile rates prevailing three months ago was inexplicable and unjustified, especially when the customs duty on Raw Cotton has remained unchanged.

With exporters having entered into contracts, which are currently under production and shipments, a reduction in DEPB rates for cotton textile products at this stage will adversely affect the cost calculations and prices negotiated by them with importers.

With prices expected to fall on account of removal of quotas, reduction in DEPB rates at this juncture would further aggravate the situation.

Mr Patodia appealed to the Ministries of Commerce and Textiles to restore the DEPB rates to the original level and take a comprehensive view in the matter after the new scheme in lieu of the DEPB Scheme is announced, failing which cotton textile exports which have reached $ 4.1 billion in the year 2003-2004, recording an increase of 17 per cent would suffer a sharp decline.

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