The Hindu Business Line : Survey for matching ad valorem duty rates for textiles

NEW DELHI: To protect the textile industry, facing slackening demand overseas, from the onslaught of cheap imports, the Economic Survey today suggested that specific customs duties on textiles be revised in such a way that they match ad-valorem tax rates .

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. “Revise specific duties in the textile sector to ensure that they approximate a similar ad valorem rat e as originally intended,'' the Economic Survey said today.

It suggested that these duties be reduced gradually so that they do not exceed 30 per cent ad valorem and convert them to ad-valorem rate once WTO negotiations are concluded.

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.

All these factors, the Survey noted, resulted in the production decline of textile fabrics by 1.9 per cent to 54,966 million square metres in 2008-09. The powerlooms and handlooms sector production declined by 3.1 per cent and 3.9 per cent, respectivel y, in 2008-09 over a year ago period. - PTI

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