Industry & Economy
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Textiles
Textiles: Specific duties must match ad valorem rate
Our Bureau
New Delhi, July 2 With the textile industry in the doldrums, the Economic Survey 2008-09 has suggested that specific customs duties on textiles be revised in such a way that they match ad valorem tax rates.
“Revise specific duties in the textile sector to ensure that they approximate a similar ad valorem rate as originally intended,” the survey said. It suggested that these duties be reduced gradually so that they do not exceed 30 per cent ad valorem and that they be converted convert to ad valorem rate once WTO negotiations are concluded.
Problems detected
Ad valorem tax rates are a proportion of the value of product and hence increases automatically once the value of product rises, unlike specific duty. The textile industry is the second largest employer after agriculture, employing around 35 million people.
The survey has noted that high interest rates, lack of credit, high raw material prices and recession in the US and Europe have led to decline in the country’s cotton textile industry.
“Factors such as higher price of cotton, high interest rates, problems in credit availability and demand slowdown in major importing countries led to the decline in cotton textiles,” it said.
All these factors, it said, resulted in the production decline of textile fabrics by 1.9 per cent to 54,966 million sq metres in 2008-09. The powerloom and handloom sector production declined by 3.1 per cent and 3.9 per cent, respectively, in 2008-09 over the year-ago period.
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