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Duty drawback rate hike too small: AEPC

Our Bureau

New Delhi , July 20

The Apparel Export Promotion Council (AEPC) has said that the recent hike in duty drawback rates on garments was too miniscule to benefit exporters in this sector.

The Finance Ministry had on July 14 revised upwards the duty drawback rates on, among other items, garments.

"Keeping in mind the high transaction cost, the various duties, cesses, excise levy and the incidence of service tax, AEPC feels that to have a positive impact, there should be a minimum hike in duty drawback of 2-3 per cent," Mr Vijay Agarwal, AEPC Chairman, said in statement here.

The AEPC statement highlighted that the rates for duty drawback have been revised upwards to 7.8 per cent from 7.5 per cent for man-made garments (an increase of 0.3 per cent), to 7.2 per cent from 6.8 per cent for blended garments (increase of 0.4 per cent) and to 6.7 per cent from 6 per cent for cotton garments (increase of 0.7 per cent).

Mr Agarwal has urged the Government to take a re-look at the recently announced drawback rates.

"If it (Government) really wishes to encourage the garment sector and provide employment to the unemployed rural youth, it must give an enhanced rate of refund to the industry," Mr Agarwal said.

Garment exports target

AEPC has said that the Textile Ministry has set a target of $15 billion for garment exports by 2010 and that unless major incentives are given, this target would be unachievable.

Duty drawback is essentially refund of the excise duty and service tax charged by the Government.

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