Exporters fear business loss after cut in duty drawback
Apec said that the apparel industry needs to book orders in advance for the next season.
New Delhi: The government’s decision to revise duty drawback rates from October 1 has not gone down well with exporters with some alleging that it will hit their businesses.
The apparel industry is in panic mode, with exporters claiming that it has the potential to have long term impact on their business.
The new all industry rates for garments has been revised to 2 per cent as compared to the 7.7 per cent drawback available till now. “There is panic in the industry. The move will result in loss of our businesses as it will make Indian exports less competitive in comparison to other countries. And once you lose a client or business it is difficult to get it back,” H.K.L. Magu, vice chairman Apparel Export Promotion Council said.
He said that there are a series of embedded GST taxes on which exporters don’t get any credit like on electricity, petroleum products and real estate among others.
“It will hit the capacity of the industry to create jobs. Infact many small scale industries could close down due to cut in duty drawback and will not go down well with Prime Minister’s Make in India campaign,” said Mr Magu.
He said that drawback was one of the key policy support measures towards lifting the industry’s cost competitiveness in the wake of slew of factors adversely affecting the sector. “With this steep decline in the drawback support over 7,000 small and medium enterprises in the apparel exports will be crippled and doomed in uncertainties,” he added.
AEPC said that the apparel industry needs to book orders in advance for the next season.
The uncertainty prevailing for the last three months regarding the GST rates on apparel and job work have already cost the industry’s order books due to which its exports were down by 15 per cent in July and 5.5 per cent in June
