Textile sector wants hike in value caps

The textile industry has urged the government to reconsider last month's revision of duty drawback value caps and to increase the caps on an overall basis.

The latest notification, which came into effect on November 21 this year, raised value caps for products like overcoats, windcheaters, suits, ensembles, jackets and trousers in knitted and woven segments.

While most in the industry welcome the latest notification which increased duty drawback value caps in some specific sectors, they say it still falls short of demands to restore the rates prevailing in January 2005 and to put in place a more open and transparent policy.

"We have urged the finance ministry to reconsider the upward revision in the drawback rates on an overall basis and also to increase the value caps in all those apparel products which have been left out in the latest revision," said Apparel Export Promotion Council Chairman A Sakthivel.

The council also suggested that for the industry to double its exports it was imperative that the rates prevailing before January 18, 2005, be restored.

In the post-quota regime, duty drawback rates have been changed three times. In January 2005, the government changed duty drawback structure from value-based to weight-based, which hit the industry hard and also affected exports.

Subsequently, the value-based pattern was restored in May, but the drawback rates and value caps were decreased.

"Reducing drawback rates from 9.5 to 3.6 in January was a huge jolt. To make matters worse the revision to 6.5 in May came with a reduction in value caps. The latest revision is only a small step which will serve little purpose," said Gokuldas Exports Managing-Director Rajan Hinduja.

He added, "The government has to be more open and transparent in its policies. This uncertainity, especially when value caps are lowered, does not augur well for the industry."