Tirupur Apparel Exporters See Red As Customs Department Plays Villain

Trade & Policy

Tirupur Apparel Exporters See Red As Customs Department Plays Villain

Customs Department has made it mandatory for the Tirupur apparel exporters’ cluster to at the VO Chidambarnar port in Tuticorin to furnish detailed records of exports carried out by them retrospectively from the year 2004.

There was a loud volley of protests from the exporters facing this situation. They pointed out that it was impractical for anyone to maintain and furnish records over such a long period of time as the earlier years fell under the era where computers were not widely used. Asserting that such a move might well strangulate the industry, they bemoaned that the Customs department is poised to cancel Imports Exporters (IE) code, in the event the exporters were unable to furnish the records.

Apparel units in Tirupur have been exporting their goods to different Western countries over a period of time. In the currently concluded financial year, the knitwear exports registered a turnover of INR 23,000 crore. The figure was INR 3,000 less than the target achieved in the previous financial year. The trade routes available for these goods to make their transit to their destinations comprise ports in Tuticorin, Kochi and Chennai besides the airports at Chennai and Coimbatore.

The government at the centre on its part had introduced duty drawbacks and other such incentives to ensure that exporters are encouraged to perform at their peak capacity. These duty drawback rates were in place according to the value of the goods exported. The union government had mandated exporters to furnish their shipping bills to banks for obtaining Bill Realization Certificate (BRC). The BRC was the key indicator that an exporter had received payment as per the bill from a foreign client.

The Reserve Bank of India (RBI) automated the system from 2014 onwards and it mandated that if exporters did not close their shipping bills within a span of two years, they will be faced with the option of being placed on the caution list. The implications were that the banks would place the data online under the Exporters Data Processing and Monitoring System (EDPMS). Any exporter found violating the norms as per the data made available could be stripped of his or her IE code. The government had to take these measures due to fraudulent exports shown by exporters to avail of duty drawbacks.

Meanwhile, the RBI has extended the date of submission of bills for exports carried out till December 2015 to December 2018. The exporters who received this relief however, saw a red flag when customs officials at the Tuticorin port sounded the mandate that they have to submit their records of exports done since 2004.

President of Tirupur Exporters’ Association, Raja M Shanmugham, reacted in a media statement, “The BJP-led central government has promised to ease business doing, but this kind of move will strangulate the export business. It could have happened due to misinterpretation. But it would be a herculean task for the knitwear units to get the export records for about 15 years. Only recently, many companies have switched to the computerized system of bookkeeping from manual and hard copies. So the customs department should revoke the order.”