Mumbai: The textile industry has sought restoration of Duty Draw Back (DDB) and Duty Entitlement Pass Book (DEPB) rates and the refund of service tax on export related services to remain competitive in exports, a top industry official said on Sunday.
“In the short term, the Textile Ministry needed to consider restoration of drawback rates to the levels existing prior to September 2008; issuance of dues pending from The Technology Upgradation Fund Scheme (TUFS) and the refund of service tax on export related services and accumulated cenvat credit on capital goods,” the Cotton Textiles Export Promotion Council (Texprocil) Chairman, V S Velayutham said.
While raising key issues to the attention of the textile minister, Dayanidhi Maran, Velayutham also stressed on the urgent need to introduce a new Fibre Policy and attend to issues relating to drawback and unrebated state levies.
It must be noted that except India all other Asian economies have increased their market size and share in textile exports even during this economic slowdown period, Texprocil vice chairman, Manikam Ramaswami said.
India has been losing its market share as it is losing its relative competitiveness steadily. While China has increased its drawback from 12% to 17%, Pakistan has introduced an R&D rebate of 7.5%.
Bangladesh enjoys zero duty into EU and Vietnam is growing rapidly with its competitive costs.
India, on the other hand has been reducing the benefits offered to exporters. During the last four years, the drawback has come down steeply by 43% in cotton yarn, 19% in fabrics and 19% in made ups.
As part of the long term solutions, Ramaswami urged the textile ministry to assist textile exporters build brand India and Indian brands.
He suggested the negotiation of a free trade agreement with European Union and reduced tariff for textiles in the countries where India had a negative trade balance. Suggestions were also made with regards to assisting exporters to fight anti subsidy duties and introducing labour reforms.
Velayutham said that textile minister has rightly recognized the potential of Indian textile sector which can generate additional 10 million jobs in the next 5 years.
Within days of assuming his office, textile minister has clearly spelled out his thrust areas to push industry growth rate to 8-10%, which includes attracting higher investments for technology upgradation to the tune of Rs1,55,000 crore over the next five years and bringing in larger FDI to aid the growth of the sector.