The Directorate General of Foreign Trade (DGFT) has decided to review all export incentives in the technical textile sector before April for a possible recall of export subsidies.
This follows a clarification sent by DGFT, which classified only 33 items under technical textiles, unlike some hundred items allowed previously. In simple terms, technical textiles are materials and products used for their technical performance and they differ from other man-made or synthetic fibres. They use a very high grade of petrochemicals to render high tenacity and high resistance to the fibre. While polyester, viscose, nylon and polypropylene account for 70 per cent of the fibres used in technical textiles, speciality fibres of an upgraded variety comprise the rest.
DGFT, in its clarification, stated that technical textile is a product manufactured for a non-aesthetic purpose, where function is the primary criterion. This includes those used for automotive applications, medical textiles, agro textiles and protective clothing like heat and radiation protection, firefighter clothing, molten metal protection for welders, stab protection, bulletproof vests and space suits.
Official sources added the review of benefits to technical textile exporters was triggered by investigations of the Customs department. It found that many took an advantage of these export subsidies for non-technical textile items.
If upon review it is found that any exporter has availed of the subsidy for technical textile which does not fit the description of DGFT, the funds have to be recovered immediately, said an official source.
Exporters say DGFT had not clarified such issues earlier and the definition of technical textile included only “woven fabrics of synthetic filament yarn”. This could also mean plain polyester material or any material which contains polymer.
Exporters receive subsidies for export of technical textiles under the Focus Product Scheme (FPS) of the commerce ministry. This aims to incentivise export of select products that have high export intensity/employment potential and thereby to offset infrastructure inefficiencies and other associated costs in marketing of these products. Under FPS, an export receives duty credit at two per cent of the value of the goods in foreign currency. This duty credit is sellable or transferable. For some products, duty credit can be as high as five per cent.