Indian Textile Exports Set To Boom After Government Enhances Duty Drawback

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Indian Textile Exports Set To Boom After Government Enhances Duty Drawback

Exporters in the textile segment have heaved a sigh of relief after the union government recently announced an enhanced duty drawback. This Diwali gift is expected to give a shot in the arm to the textile and clothing sector which was under undue stress in the global markets, said an industry insider.

Many of the items which were under stress were considered for revision of duty drawback. For example, duty drawback rate on home textiles increased from 7.3 per cent to 7.5 per cent and product like blankets would enjoy duty drawback of 8 per cent now (earlier 7.2 per cent). In the cotton yarn segment, counts from 50s to 100s, the rate has now been increased to 2.8 per cent (from 2.7%) while there is a marginal reduction in the value cap.

Chairman Southern India Mills’ Association, Senthil Kumar was of the opinion that revised duty drawback rates will encourage value addition. Kumar made an appeal to the government to extend the export benefits to cotton yarn as well. “The spinning sector is faced with under-utilization of production capacity,” he explained.

He further opined that the state-level taxes must be refunded for all the textiles and clothing products as is currently being done for garments.

RK Dalmia, Chairman of Cotton Textiles Export Promotion Council issued a press release which stated that the drawback rates and caps have been increased for made-ups , namely cotton and blended. “This will promote export of value added products. The drawback rates and caps have been retained mostly for cotton yarn varieties. This is a relief to the spinning sector, which is under stress now,” the release added.

Dalmia also added that the drawback rates for fabric should be increased because India is emerging as a hub for fabric production.