The Hindu Business Line : Tirupur body seeks higher depreciation rate

Imposition of fringe benefit tax on sales promotion expenses including those on travels, tours, boarding and samplings has affected the export trade badly.

G. Gurumurthy

Coimbatore, Jan.17 The knitwear exporting industry has asked for an enhanced depreciation rate on plant and machinery for the garment industry considering the sector’s susceptibility to frequent technological changes.

The garment industry has to replace machinery at frequent intervals on account of both sharp competition in export trade and the high obsolescence rate in the machinery used.

This calls for enhancing the depreciation rate from the 15 per cent permitted since 2005-06 to the previous 25 per cent or alternatively, a separate higher rate must be set for the sector, the Tirupur Exporters Association (TEA), on behalf of the knitwear industry, has represented to the Union Finance Minister.

pre-Budget memorandum

In its pre-Budget memorandum, the TEA said that the imposition of fringe benefit tax on sales promotion expenses including those on travels, tours, boarding and samplings had affected the export trade.

Similarly, the levy of service tax has pushed up travel costs and payment of commission for their overseas agents, thereby, pushing up the exportable product costs.

It urged the Ministry to exempt all services tax.

It also pleaded for withdrawal of the service tax on rentals considering the fact that many garment producers operated from rented premises which add to their cost overheads.

Highlighting Impact

Highlighting the adverse impact cast by the 15 per cent rise in rupee appreciation on garment exports, the TEA sought hikes in the duty drawback rate for export by another three per cent.

The association stressed on the need to suitably compensate the State levies and transaction costs incurred by exporters.

The TEA also urged the Finance Minister to increase budgetary allocation to enable increased interest reimbursement under the technology upgradation fund (TUF) scheme and to avoid delay in the reimbursement.

Extending the national rural employment guarantee scheme to the garment sector will enable it meet its manpower shortage and at the same time give jobs to six million rural people, the memorandum noted.

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