Duty drawback to raise competitiveness in global apparel market

Importance for lycra based yarns/fabrics, that constitute about 25% of world trade in textiles, is growing rapidly

In order to boost overall sentiment in Indian apparel sector, the ministry of finances has for duty drawback purposes created a separate entry distinguishing certain export products such as cotton yarn of less than 50 counts or 50 or more counts; core spun cotton yarn containing three per cent or more of lycra /spandex/elastane, cotton blankets and flame-retardant fabrics based on their increasing international demand.

“The demand was long-pending. Overall the rates for cotton textiles and the drawback caps have been increased. Also, the government has identified certain categories of textile drawback which are eligible. The new drawback rates competitiveness of Indian apparel exporters and affect the entire value chain positively,” said RK Dalmia , Chairman , the cotton textiles export promotion council (TEXPROCIL).

There has been growing importance of lycra based yarns/ fabrics which constitute about 25 per cent of the world trade in textiles. However, the rates for lycra based products should have been increased by at least one per cent and not 0.1 per cent in order to offset the high import duty on lycra.

“We will submit revised calculation in this regard for further raise the drawback rates and caps for lycra-based products and hopes for a sympathetic consideration,” said Dalmia.

Interestingly, the notification announcing the drawback rates also recognises the need for continued scrutiny for preventing any excess drawback arising from mismatch of declarations made in the item details and the drawback details on the shipping bills.

This clause should be used judiciously by the customs department to avoid unnecessary harassment and inconvenience to the exporters operating under the drawback scheme.

 

According to the latest report of the Labour Bureau in the Ministry of Labour & Employment, the textiles sector being the most labour-intensive sector and second largest employer after agriculture has added 190,000 jobs in 2013-14 contributing to about 70 per cent of all hiring.

The sector can contribute hugely towards promoting inclusive growth, developing Tier II cities and fulfilling the goal of "Make in India" as envisaged by the new government, Dalmia added.