The Hindu Business Line : Tirupur knitwear industry seeks higher depreciation rate

Tirupur Exporters Association also wanted the Centre to extend its employment guarantee programme to cover the garment industry, which has the potential to offer jobs for minimum 200 days in a year against the Government's programme of assuring 100 days of work in a year.

Coimbatore , Jan. 31

THE knitwear industry in Tirupur has sought an enhancement in the rate of depreciation allowed for plant and machinery considering the high susceptibility of the garment industry to technological changes.

The garment industry faces severe competition in export trade and is bound to replace used machinery with modern machines at frequent intervals. This calls for a higher rate of depreciation allowance, the Tirupur Exporters Association has said. It wants the current rate of 15 per cent to be raised to 50 per cent for the garment industry.

Though the Government had allowed charging 20 per cent depreciation in the first year for the investment made on machinery, in respect of those purchasing machinery beyond October, the allowable depreciation is limited to 10 per cent only and the balance 10 per cent is not being carried forward to the next year. The Tirupur Exporters Association wants to carry forward the balance depreciation to the next financial year.

Making a submission, in its pre-budget memorandum on behalf of the knitwear industry, the association's President, Mr A. Sakthivel, also wanted the Centre to extend its employment guarantee programme to cover the garment industry which has the potential to offer jobs for minimum 200 days in a year against the Government's programme of assuring 100 days of work in a year; the wages could even be higher at Rs 70 per day. The garment sector can bring in an additional five million jobs. He also suggested that in respect of garment exporting units whose labour wage payout is 25 per cent higher than the previous year, due weightage can be given for them in the matter of income tax assessment.

On the fiscal side, the association has pleaded for lowering the excise duty for man-made fibre/yarn to the levels of cotton to enable the garment sector enlarge the use of synthetic fibre/fabric content. At present, cotton is the most preferred fibre choice for India's garment exports, though the seasonal application of these garments is limited to three months a year. High price of synthetic fibre due to the duty differentials has deterred the garment industry from increasing the usage of synthetic fabrics and exploiting the market, unlike India's competitors. Lowering excise duty on synthetic fibre and yarn would increase focus on production of non-cotton garments and widen exports.

The Tirupur Exporters Association has also sought exemption of exports from fringe benefit tax, service tax and limiting the applicability of tax on DEPB transfers to pending assessments alone.