New Delhi, Sept 23 (KNN) With the government announcing new drawback rates to be implemented in October, the new low rate of 2 per cent is not in the best interest of the textile industry, particularly the Micro, Small and Medium Enterprises (MSMEs) involved in garment exports, Apparel Export Promotion Council (AEPC) said.

Ashok G. Rajani, Chairman of AEPC in a press statement said that the industry was expecting a continuation of the old rate, but the government stood otherwise.

Rajani said that the larger production cycle is under various pressures due to the GST, the industry needs to take in orders for next season, but with such rates it seems impossible to do business. The government must consider the issues surrounding the sector and immediately go for a roll back of the new rate.

Instead, there must be a continuation of the old duty drawback rate, at least till the month of March 2018, so that the sector could have stability before it prepares to go for the lower rate.

The Council informed that the government has all of a sudden reduced the 7.7 per cent drawback ate to 2 per cent. This decision will further cripple the already struggling MSMEs involved in the textile and garment business.

Citing the scenario further, AEPC lamented that post implementation of the Goods and Services Tax (GST) in the country; the export of textile has already registered a slow trend.

Also the industry is already facing severe financial pressure due to the increased working capital requirements under the GST regime adding up to the overall stress keeping the export book extremely low.

The rupee overvaluation is another factor, which has been haunting the export business and above all this; a new low duty drawback rate means disaster for the several MSME units in the apparel exports, AEPC added. (KNN/DA)