The Hindu Business Line : Tirupur exporters want duty drawback rates restored

Coimbatore, Sept. 1 The exporting community in Tirupur is crying hoarse over the downward revision in duty drawback rate for 2008-09 on knitted garments from 11 per cent to 8.8 per cent.

The Tirupur Exporters’ Association (TEA) has appealed for restoration of the rate to its earlier level.

Stressing the need for restoring the rate, Mr A. Sakthivel, President, TEA, has said the garment exporting units were under severe strain on the price front due to the steep rise in input costs such as yarn and power charges, and transaction costs.

He admitted that the cost escalation was mainly due to increase in petroleum products. “The cotton yarn price has risen by 25 per cent. The load shedding schedule announced by the Tamil Nadu Government has forced garment manufacturers to resort to captive power generation.

The rising cost of diesel has further accelerated the cost of power by almost 2.5 times the TNEB grid power cost.

Job work charges such as knitting, dyeing, compacting, calendaring, embroidery/printing and packing materials cost have been increased by 25-40 per cent within a span of three months,” he said.

While the rates have soared, the garment exporting units were not in a position to increase the price of the garments as “these were quoted nine months to one year back and it could not be altered proportionately to meet out the rise in input and transaction costs,” he contended.

Negative growth

Mr Sakthivel further noted that garment exports to the US was recording a negative growth in the past seven months. In the case of European Union too, the trend was slightly on the negative side, he said.

That is not all.

The sudden removal of interest subvention at 4 per cent given on packing credit interest rates would affect the cost of manufacturing, he said, and requested that it not be withdrawn.

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