India: Industry Opposes Duty Drawback Benefits To Imported Fabrics

Industry news

India: Industry Opposes Duty Drawback Benefits To Imported Fabrics

The garment industry has welcomed the Union government's special package to boost exports. However, it has created a worrisome situation for the fabric manufacturers, as the proposals result in an imbalance in the export-import policy. According to the proposal, fabrics imported by garment exporters under Advance Authorisation Scheme will be allowed to avail of duty drawback at `All Industries Rate' for domestic duty paid inputs. The textile sector feels that the duty drawback concession should have been confined only to garments made using man-made fibre fabrics. The generic permission of duty exemption to garments made of all fabrics will result in cotton fabrics getting dumped from abroad into the domestic market. Already, the textile mills that produce cotton fabrics are holding huge inventories.

Presently, there is a huge disparity in the international prices of fabrics made of MMF and the domestically made MMF fabrics. Whereas, the case with the cotton made fabrics is entirely different and hence, the government should rethink on the new initiative announced, pointed out S. Dhananjayan, an industry consultant and chartered accountant. Moreover, the major chunk of the shelf space in the retail chain stores abroad were now occupied by garments made of MMF.

But the main hindrance for garment exporters in the country for moving to MMF fabrics is the exorbitant prices quoted as the segment has been in the control of a few manufacturers. So that segment alone needed a competitive situation, opine experts.