New drawback rate disappoints garment exporters

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Saurabh Gupta | 23 Sep, 2017
Apparel Industry expresses extreme disappointment on the announcement of the all industry duty drawback rates on export of ready made garments, the official body of apparel exporters, AEPC said in a press release on Friday.

The Government Friday announced the new drawback rates to be effective from 1st October 2017 (post-transition period ending 30th September 2017).

AEPC said, "The new All Industry Rates (AIR) for garments is 2 percent as compared to the 7.7 percent drawback available till now. This low rate is unexpected as this body blow is coming at a time when the industry is facing continuous decline in exports due to global conditions, rupee overvaluation and uncertainties post by the GST regime."

"The industry is already facing severe financial pressure due to the increased working capital requirements under the GST regime and stress due to the above uncertainties keeping the export sentiments extremely low."

"The drawback was one of the key policy support measures towards lifting industry's cost competitiveness in the wake of above slew of factors adversely affecting the sector. With this steep decline in the drawback support over 7000 small & medium enterprises in the apparel exports will be crippled and doomed in uncertainties. This will have an adverse impact on the employment being provided to over 12 million people be provided by this sector," added council.

Commenting on the issue, Ashok G Rajani, Chairman Apparel Export Promotion Council said, "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."

"I think the present new rates are unacceptable and the Ministry of Textiles should immediately consider AEPC's recommendation for extending the current transition rates till 31st March 2018, to instil confidence in the sector and also ensure a smooth transition into GST and also for sustaining the employment in the sector," he said.

"In the absence of an encouraging drawback rates, the exports will further witness a sharp decline just ahead of the peak festival season when the industry was expecting recovery," he added.