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Industry & Economy - Readymade Garments


Garment exporters seek relaxation in EMD rules

G Gurumurthy

COIMBATORE, Jan. 25

GARMENT exporters have asked the Government not to effect forfeiture of earnest money deposit (EMD) paid by them for non-utilisation of export quotas allotted to them for the year 2001.

The Apparel Export Promotion Council (AEPC) on behalf of its members has approached the Government with a suggestion that exporters who had utilised 75 per cent of their quotas for 2001 be returned the entire EMD amount paid by them to the council.

In respect of others whose quota utilisation varied between 50 per cent and 75 per cent, the EMD forfeiture should be graded pro-rata and for those whose quota utilisation fell below the 50 per cent level, the entire EMD amount could be forfeited. The council has written to the Textile Ministry asking for this relaxation citing the difficult export environment faced by the garment exporters during 2001 in the wake of the terrorist attacks on the US World Trade Center on September 11 last year.

It has cited the dislocation that took place in the garment shipments to the US East Coast, the prominent destination for Indian garments. At present, garment exporters are made to pay EMD in the form of bank guarantees to ensure full utilisation of export quotas allotted under the `first-come-first-served' (FCFS) basis for `Ready Goods' category or for revalidating the past-performance entitlements (PPE).

As per the existing provision, the whole EMD paid by the exporters who failed to utilise quotas below the 90 per cent levels is forfeited. The AEPC Chairman, Mr Virender Uppal, who confirmed the AEPC's communication to the Government seeking relaxation in the rules on EMD, said that his council had in fact wanted the Government to extend this relaxation till 2004 when the quantitative restrictions would be fully lifted.

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