Synthetics, rayon exports start trekking north

For the first time this financial year, export of synthetic and rayon textiles is showing signs of recovery. Though the latest figures for September show drop in exports at about 8 per cent, it is an improved performance over the 18 per cent dip witnessed in August.

In July synthetic and rayon textile exports fell by a steep 42 per cent. This was the largest drop witnessed this year. Sources at Synthetic and Rayon Textiles Export Promotion Council (SRTEPC) hinted that with the booking season set to begin, exporters have "somehow adjusted to the uncertainties in policies".

From April to September this year, exports dipped by almost 24 per cent to Rs 3,601.2 crore from about Rs 4,692.3 crore over the same period last year.

Fabrics saw international sales drop by 35 per cent. Made-up textile dropped by 14 per cent and yarn exports slipped by 7 per cent. Fibre was the only constitute to record a positive growth at 59 per cent.

Though exporters expect the October performance to be a shade better and improve in the following months, no one is confident of crossing the government target of Rs 10,350 crore for the year.

This is Rs 400 crore more than last financial year's total export turnover.

The main reason for the "uncertainity" among exporters is the reduction in the duty entitlement pass book (DEPB) rates. The rate decides how much the government reimburses local duties and cess, such as excise duty and mandi cess, paid by exporters.

"If the DEPB rate is high our products are competitive in the international market. Otherwise the products are high priced and lose out to other international players. Thus the fall in exports," said sources close to the industry.

The government now proposes a new scheme which will be broad-based. "But the scheme is unclear and the government is yet to announce details," said sources. Another area of discord is the issue of exemption of export earnings from income tax under 80 HHC .

"There is some confusion about the exemption claimed. Cases have been opened against a few exporters and recovery notices have been sent," said an industry source.

Albeit the issues, exporters are expecting margins to improve. One industry player said: "The season is getting better and by the year-end the uncertainties should hopefully be made clear by the government."