Tirupur fears job losses due to new duty drawback rate

By

Isabelle Crossley

Published
Sep 27, 2017

In response to the government’s recent decision to reduce the duty drawback rate, the Tirupur Exporters Association has urged the government to reconsider, saying consequences could be dire for the city.

The government reduced the duty drawback rate for the knitwear export sector from 7.6 percent to two percent, a drop of 5.6 percent. The response to this from exporters has been one of fear and apprehension because many are already struggling to compete with other countries that are increasingly offering cheaper garment exports such as Vietnam, Cambodia, Sri Lanka, and Bangladesh.

Raja M Shanmugham, the President of the Tirupur Exporters Association, said in a press release that he feared huge job losses in the city which is known for its garment manufacture and exports if the government does not change its mind about the reduction.  Shanmugham stated that around 80 of garment exporters there would be subject to the new rate. This is because the exporters fall under the Micro, Small, and Medium Enterprise (MSME) category that the new rate could spell the worst trouble for.

Shanmugham was not the only one to voice his fears concerning the new rate as P Nataraj, the Chairman of the Southern India Mills Association, also urged the government to reconsider and opined that this new rate is not in line with the government’s pledge to boost textile exports and create more jobs in the sector. In this way, the new rate has been met with a negative response and so the question is whether the government will reconsider it.