The Hindu Business Line : Mixed reactions to duty drawback rate announcement

The Clothing Manufacturers' Association of India's President, Mr Premal Udani, said the trade and its members had expected substantially higher drawback rates.

He said, in a press release, "The net increase in the drawback rate is negligible. The trade was hoping for a restoration of drawback rate to 10 per cent, with no caps. The six per cent rate announced is wholly inadequate. Worse, the cap of Rs 19 is a complete discouragement to exporters of value-added garments."

"Garment exporters find themselves in a tight corner. On one hand the Government is coming up with innovative ways to collect taxes and on the other hand drawback rates are systematically being reduced," he said.

Though Mr B.K. Patodia, Chairman, The Cotton Textiles Export Promotion Council (Texprocil), welcomed the shift from the `weight' based calculation of DEPB rates to computation by `value', he expressed disappointment specifically with regard to the rates on coarse and superfine counts of cotton yarn, fabrics, bottom weights and denim.

The rates announced on an ad valorem basis were much lower than that worked out recently on weight basis, he said.

Mr Patodia cited the instance of cotton yarn of count group 30s, one of the largest segments of exports. The present rate of 3.5 per cent of f.o.b. value of cotton meant a reduction of 10 per cent from the earlier rate of Rs 4 per kg.

Similarly for coarse count fabrics such as drills, the present rate of 3 per cent of f.o.b. value results in an effective reduction of more than 30 per cent from the earlier rate of Rs 4 per kg. He said that while the high value cap of Rs 50 per kg was welcome, the effective rate of drawback on ad valorem basis was lower than the Rs 8 per kg announced earlier.

Mr Patodia said the industry was hoping for higher rates to be announced so that it neutralise the incidence of input stage duties and levies but was disappointed with the rates now announced.

He added that Texprocil discussing with the trade and would soon submit a representation to the committee.

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