TEA upset over reduction in duty drawback rates on apparel

The Tiruppur Exporters’ Association (TEA) is dismayed on the reduction of duty drawback rates on apparel items. In this revised list, government has reduced rates for value added readymade garments while improving rates for raw materials like cotton, yarn and fabrics. The rates have been lowered from 2 to 1.8 per cent for few and 1.9 per cent for others.  

The new list has disappointed the knitwear garment sector in Tiruppur when they were expecting hike in the rates, said TEA in a representation made to the prime minister. The revision will not only affect the exports but will also strengthen the business of competing nations.

Highlighting the plight of the apparel industry, TEA has asked the prime minister to initiate a consultative process with all stakeholders in the apparel manufacturing segment and arrive at means to compensate the exporters by increasing the drawback and ROSL rates so as to arrest the further fall in exports.

It may be noted that the industry has been crying for an increase in the duty drawback rates because of the continuous negative growth being encountered post implementation of GST, said the letter urging the prime minister to look into the issue and help to revise the drawback rates upwards. 

"When the raw material cotton and subsequent processed item cotton yarn drawback rates were enhanced, how can the value added garment sector and employment generator be neglected?" pointed out TEA president Raja M Shanmugham.

India is already at a disadvantage with all its competing nations like Bangladesh, Cambodia, Myanmar, Ethiopia and Vietnam that enjoy tariff benefits with the western countries. Till July 2017, a portion of this competitiveness gap was being offset by the cushion made available through duty drawback and ROSL benefits. The elimination of this additional cushion has immediately shown its result whereby there is an unprecedented month on month fall in apparel exports for the past one year.

"Your intervention in this regard will go a long way in not only preventing huge job losses in one of the biggest employing industry of the country but also realise its true potential of becoming the global leader in textile manufacturing," stated the letter.