The Hindu : Tamil Nadu News : “Increase duty drawback rates”

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Monday, Aug 25, 2008
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Tamil Nadu

Tamil Nadu

“Increase duty drawback rates”

Staff Reporter

Textile exporters’ association urges Centre to remove service tax under all heads

KARUR: The textile export industry here has urged the Centre to increase the duty drawback rates and remove service tax under all heads and sought interest subvention of four per cent till March 2010 to help the industry overcome the crisis.

In a memorandum to the Union Finance Minister, the Karur Textile Manufacturer Exporters’ Association has said the continued hardship it faces on various fronts has made the industry more vulnerable than ever before.

The memorandum, a copy of which was made available to the press here on Saturday, said the industry was the only segment in the manufacturing sector that was employing a large number of unskilled and semi-skilled workers displaced from agriculture.

During 2007-08, it suffered a lot; many units were closed down owing to the rupee appreciation.

Then the Central Government announced a relief package by the way of interest subvention.

It was valid till March 2009.

However, all of a sudden, the government announced that the interest subvention would cease to be effective from October 1.

This, the association said, would hurt the industry most.

Bolt from the blue

“We have come to know that some members of the committee for formulating the duty drawback rates recommended lower duty drawback rates, and this has come as a bolt from the blue,” said association secretary P. Gopalakrishnan.

Though the dollar was appreciating against the rupee, the textile industry had been facing huge problems since January 2008, as the yarn prices had gone up by 30 per cent and an increase in the prices of dyes and chemicals, compounded by a 20 per cent hike in transport cost, labour charges and inflation.

The industry was finding it difficult to balance their production cost to get fresh contracts, Mr. Gopalakrishnan said.

India unable to compete with China, Pakistan

The Indian companies were unable to compete with China and Pakistan that have come out with relief packages to safeguard textile units in their countries from the raising production cost.

In these circumstances, he said, the reduced drawback and removal of interest subvention would threaten the survival of many units.

Citing these reasons, the association has urged the Finance Minister to consider increased duty drawback rates, extend four per cent interest subvention till March 2010 and remove all service tax under any head for the industry and help the textile industry in the times of need.

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