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Wednesday, Mar 16, 2005

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AEPC calls for restoration of value-based duty drawback rates

G. Gurumurthy

Tirupur , March 15

GARMENT exporters, who met here under the aegis of Apparel Export Promotion Council (AEPC), have demanded restoration of value-based duty drawback rates instead of the weight-based rates introduced from January 19 last.

Considering the urgency of the apparel exporting community, compelled to stick to their re-export orders at the prices frozen with the buyers, the Union Finance Ministry should come out with an interim order restoring the previous DBK rates, the exporters said.

Briefing press persons on the difficulties faced by the garment exporters in view of the sharp reduction in the DBK rates, the President of the Tirupur Exporters Association (TEA), Mr A. Sakthivel, and Mr Satish Mahajan, Chairman of the Clothing Manufacturers Association of India (CMAI), Bangalore (Karnataka region) said garment exporters suffered a loss of Rs 325 crore in export realisation with the change in the DBK rates in the last 40 days. A study on garment export performance between January19, the day the new weight-based DBK rates were introduced, and February 20 revealed that a total of 224 million pieces valued at $884 millionwere shipped and this volume was higher by 15 per cent over the previous year's exports.

The exporters drew a DBK rate between Rs 4.50 and Rs 5.50 per piece, instead of Rs 19.55 they used to get under the previous DBK system, a reduction of Rs14 apiece which, according to them, was too sharp for the exporters to bear.

Mr Karthikeyan, Secretary of TEA, and Mr Premal Udani, President of the Mumbai-based Clothing Manufacturers Association of India, who were present at the briefing maintained that while it was welcome that the government had referred the DBK issue to a four-member committee to study and come out with a decision by mid-April, the garment exporters had to meet re-orders received from their buyers (catalogue businesses) which were fixed as per earlier pricing, based on the drawback at rates prevailed then.

Unless the old rates are restored, the garment exporters would lose their competitive edge and the market to their rivals in other South-Asian nations.

Garment exporters felt that when the inputs on export manufacture attracted customs and excise duties which were fixed on ad valorem basis, the change in the DBK rate, which isto reimburse these duty incidences, from ad valorem to weight basis was not fair.

Garment exporters said that in the fresh input cost data submitted by them to the Government last month, they had demanded for a 17 per cent DBK rate for garment exports which covered among other things reimbursement of transaction cost and fuel costs.

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