INDIA: Delay in duty drawback release affects apparel industry

MUMBAI: The delay in releasing duty drawback by government is adversely affecting the apparel industry, Vijay Agarwal, chairman, Apparel Export Promotion Council (AEPC) said here on July 26.  
 
The chairman further added that apparel industry is losing Rs 600 crore every year as they pay 9-10 percent duty in various forms such as excise, service tax and VAT.

However he also pointed out that, government has raised rates for duty drawback to 7.8 from 7.5 percent for manmade fibers; whereas for blended garments it was raised to 7.2 percent from 6.8 per cent and for cotton garments it was raised to 6.7 from 6 percent. 
 
Vijay Agarwal clarified that keeping in mind the high transaction cost, duties, cesses, excises, levies and the incidence of service tax, the current drawback is miniscule against our expectations of 2-3 percent. 
 
Further if government does not provide any major incentives, the target set by textile ministry of $ 15 billion for garments export by 2010 would be unachievable.

India made significant progress in the exports to the US and the EU, shipping about 70 percent of total exports and the volume of exports started growing by 33 percent.

However country exports roughly 1.6 billion pieces of garments every year, which provide employment to around 3 million workers mainly women, other backward classes, weaker sections of the society and minorities. 
 
AEPC is planning to increase exports to Latin America, East European countries and South East Asia. 
 
The Apparel Export Promotion Council (AEPC) represents about 3,700 garment exporters including garments manufacturers.


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Added: July 27, 2006 Source: Agencies
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