Reduction in drawback rates on garments might have negative impact on exports: SIMA

New Delhi, Dec 8 (KNN) For several textile items, the Indian government has marginally increased duty drawback rates applicable for the year 2018-19. However, there is a marginal decrease in the duty drawback rates of apparel items.

“The reduction in drawback rates on garments might have negative impact on exports,” said P Nataraj, chairman, Southern India Mills Association (SIMA), in a release.

The announcement made through Ministry of Finance’s notification shall come into force from December 19, 2018.

The duty drawback has been increased from 1.2 per cent to 1.7 per cent for cotton yarn, from 1.3 per cent to 1.6 per cent for cotton fabric, and from 2 per cent to 2.6 per cent for made-ups.

“Consequent to the significant changes made in the tax structure after the implementation of GST, the textiles and clothing industry has been demanding the government to announce enhanced the duty drawback rates,” he said.

“The increase would help the exporters to improve their competitiveness especially in the countries with which India has preferential tariff agreements (PTAs),” he said.

“The removal of value cap on most of the items, which has been discouraging value addition, is another welcome feature of the announcement,” Nataraj added.

Nataraj said, “The government could have at least continued the existing rates of duty drawback to sustain the existing level of garment exports.”

He appealed the government to at least retain the existing rates, and added that it is essential to refund the embedded/blocked taxes and also the inverted duty to further improve the competitiveness of the country’s textile and clothing sector.