The Hindu Business Line : Cotton textile exporters seek sops to offset strong Re

Chennai, June 27 The loss to cotton textile exporters due to the strengthening rupee against the US dollar is now threatening the livelihood of workers and cotton farmers as mills are facing closure, according to The Cotton Textiles Export Promotion Council (TEXPROCIL).

The council’s Chairman, Mr Prem Malik, said cotton textile exporters had all along worked on a 5 per cent margin — a fact acknowledged by the RBI. The rupee’s appreciation — nearly 12 per cent against the US dollar — has therefore pushed the exporters in the red.

The council is asking the Government of India to reimburse transaction costs including State levies such as Octroi, central sales tax, electricity cess and municipal charges. These amount to about 12 per cent of the FOB value of exports.

Compensation

Mr Malik, who addressed reporters after the council’s meeting in Chennai on Wednesday, said TEXPROCIL seeks a five percentage point hike in duty drawback/DEPB rates to compensate for un-rebated State Government levies and the cost of ‘infrastructural disabilities’ — the transaction costs — of about 7 per cent as estimated by the Director General of Foreign Trade and the Exim Bank. Together the 12 per cent would offset the cost disadvantage.

According to Mr Malik, exporters were beginning to feel the pinch of the appreciating rupee from the first quarter, but from July the drop in exports would be “drastic” as most exporters would no longer be able to absorb the loss.

This would threaten the livelihood of 80 million employees, 35 million of whom are direct employees dependent on the mills. In turn, the cotton farmers would also be affected. It would be “politically wise” for the Government to take steps to protect such a large segment of the population, he said.

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