The Hindu Business Line : Removal of excise duty for synthetic sector at appropriate time: Chidambaram

THE Union Finance Minister, Mr P. Chidambaram, has assured the textile industry that the Union Government is determined to end fiscal duty distortion still lingering in the industry by removing "at an appropriate time" the compulsory excise duty regime on the synthetic textile sector.

With the removal of the `Cenvat' duty in the last Budget, the Centre had already ended the excise duty regime on cotton/silk sectors and for the synthetic textiles, the gradual scale-down of excise duty rate is already on.

"For some synthetic fibres, we brought down the excise duty from 24 per cent to 16 per cent and for polyester from 18.4 per cent to 16 per cent. The polyester sector is pleading that even this rate is a burden. We'll be achieving the excise duty fold up for the synthetic industry at an appropriate time," Mr Chidambaram told a meeting of the textile exporters held at Tirupur. The meeting was held under the aegis of the UCO Bank.

Mr Chidambaram felt that a strong domestic market can only be the basis for achieving deeper strides in exports but a highly taxed domestic market would do spoilsport to building strong exports. The Government's decision to remove the `Cenvat' duty on cotton textiles was based on this conviction, though it amounted to losing revenue.

As for the demands made by the textile and garment exporters for continuation of export incentives including a higher duty drawback rate and retention of the 80HHC, he said the Centre was giving away export concessions of Rs 43,000 crore under different export incentive schemes.

One must be aware that several such schemes were being described as non-WTO compatible, Mr Chidambaram said adding that the operation of DEPB, for example, is being debated as one going against the WTO and this issue might also kick up a legal row.

Referring to the demand made by the Tirupur Exporters Association (TEA) President, Mr A. Sakthivel, to increase the duty drawback rate for the textile exporters, Mr Chidambaram said as one belonging to a Government that was highly responsive to the textile exports, he monitored the status of the textile exports on weekly basis.

When the industry raised the demand for a re-look on the duty drawback rate regime, he constituted an expert committee to go into the issue and the revised drawback rate structure was handed out by this expert committee, which was accepted without any change.

The Finance Minister, who said he had full confidence on the resonance of India's textile exports, said the global retail chains such as Wal-Mart seeking an entry to India would enable widening the market for the country's products such as textiles.

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