Garment exporters seek policy push

Garment exporters have sought flexible labour laws, lower interest rates and tax exemptions on their export earnings to double the export of readymades from India to $10 billion over the next three years.

In a memorandum to Finance Minister P Chidambaram for the forthcoming Union Budget, Apparel Export Promotion Council (AEPC) Chairman A Sakthivel said the government should accept the proposal of the European Union (EU) to increase garment export quota limits in return for Indian binding its tariffs at 20 per cent.

"If this is done, the exports to the EU may increase by around Rs 4,000 crore during the current financial year," an AEPC press release said.

The council has also demanded that for garment exporters tax authorities should allow the computation of profits, restricted to 90 per cent at present, so that they are treated at par with export-oriented units (EOUs).

A proposal to declare AEPC as the nodal agency for issuing certificates of origin for the entire garment industry has also been mooted.

It has also proposed that the duty entitlement passbook (DEPB) scheme should be included in the profits and gains of business or profession under the Income Tax Act.

To improve duty neutralisation efforts, AEPC has asked for the restoration of DEPB rates to their earlier levels, besides factoring in the extra burden on the industry due to state levies, service taxes, and high energy and transaction costs while reviewing the duty drawback rates.

AEPC said lower interest rates would encourage garment exporters to modernise and invest more in infrastructure and enable them to take larger orders.

It has also recommended the levy of a one-time excise duty at the spindle stage as a multi-stage levy increases transaction cost.

A new performance-based export promotion capital goods (EPCG) scheme has also been proposed so that exporters can import duty-free machinery valued at 50 per cent of their actual exports in the preceding year.