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Differential tax on imported goods -- Knitwear makers fear hike in output costs

Our Bureau

Currently, garment exporters are allowed duty-free import of accessories and embellishments, such as zip-fasteners, to the extent of 3 per cent of their f.o.b value of exports.

COIMBATORE, March 28

THE budget proposal to levy differential tax at 20 per cent on imported goods, as against 12 per cent and 16 per cent on similar, indigenously produced products has upset knitwear exporters from Tirupur.

The knitwear manufacturers say the move has nullified the fiscal packages extended by the Centre, including the zero duty on imports extended through customs tariffs/export-import policies, aimed at improving the competitiveness of export manufacture.

Currently, garment exporters are allowed duty-free import of accessories and embellishments, such as zip-fasteners, to the extent of 3 per cent of their f.o.b value of exports. Many of these items are also indigenously produced. The proposed levy will only increase the cost of export manufacture, the TEA has said.

The sticking point for the exporters is that these levies cannot be off-set as they are not covered under the existing duty-drawback schemes.

The TEA has urged the State Government to withdraw the levy. It has said that such taxes would force the migration of export-based industries.

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