"The government has fixed the draw back rates at Rs 180 per sq metre for woollen carpets and Rs 625 per sq metre for silk carpets which is much lower than the earlier scheme of providing DBK of 10 per cent on the net shipment value," chairman of the Carpet Export Promotion Council Shree Dhar Misra said.
At a time when the carpet industry is facing stiff competition from neighbouring countries like China and Nepal, government's policy of fixing lower DBK on carpets will prove a disincentive to exporters, he said.
Misra said the council was demanding fixation of the DBK rates at around Rs 900 per sq metre for silk carpets and Rs 300 per sq metre for woollen carpets.
Frequent changes made in the DBK rates by the government has led to a decline in exports of carpets, he said adding the growth rate of exports this year was expected to be around 7 per cent as against 10 per cent estimated earlier.
The centre had in December last year imposed a cap of Rs 132 per sq metre on both silk and woollen carpets even though DBK rates fixed from June 1 are valid up to May 31 next year, he said.
The imposition of a cap on DBK mid-way led to cancellation of export orders, and exports of silk carpets during April-June 2000-01 declined to Rs 30.71 crore from Rs 37.24 crore registered during the corresponding period in 1999-2000, Misra said.
Although the government corrected the anomaly of imposing fresh cap on DBK in January by removing the cap with retrospective effect uptil March 2000, Misra said the centre by a fresh notification announced that up to March 2000 the DBK issued in June 1999 would prevail, but for two months of April-May 2000 the cap of Rs 132 per sq metre would be imposed.
Even though the carpet industry has represented against the government's decision no action has yet been taken, he said.
he textile ministry has justified the reduced DBK for carpets on the grounds that it is given to exporters to help them recover the cost of imported raw materials like wool and silk, Misra said.
"Since the import duty on these goods has come down the centre has reduced the rates," he said, but pointed out that since the competing countries were providing incentives to their carpet exporters a higher DBK was necessary to make Indian carpets price competitive.
Indian carpets have around a 7 per cent share in the world market and the export earnings from the industry is around Rs 2,200 crore annually, he said.
