The sudden announcement of steep downward revision of DEPB rates of man-made yarn and fibre on 9th October 2007 to the tune of 2% has sent shock waves through the exporting community.
Shri Sanjeev Saran, Chairman of The Synthetic & Rayon Textiles Export Promotion Council (SRTEPC) said that the announcement has come at the worst possible time as the exporters are already reeling under the impact of the unprecedented and continued appreciation of Indian rupee vis-à-vis US dollar.
According to the SRTEPC Chairman the downward revision of DEPB rates without warning gives little time for exporters for adjustment and is likely to result in decline of exports of Indian man-made fibre textiles during the current year.
He added that the already wafer thin profit margins of exporters would be further eroded as most of the export orders have already been committed; leaving no scope for negotiations and at this late stage delivery cannot be stopped.
He also pointed out that man-made fibre and yarn are basically commodity items which are extremely price sensitive and in the context of the rising raw material prices and the increasing competition from countries like China, Indian exporters are likely to lose their existing buyers leading to shrinkage of market share.
He warned that buyers and markets lost at this juncture cannot be re-captured in the near future and would have long term adverse effects on the growth of exports of Indian man-made fibre textiles.
The SRTEPC Chairman pointed out that while announcing the enhanced DEPB rates the Government in July 2007 had made it amply clear that the new DEPB rates were enhanced to lower the impact of the appreciation of the rupee and give exporters some relief.
However, as the rupee appreciation is continuing unabated there is no logic whatsoever in revising downward the DEPB rates at this juncture.
Moreover, such sudden policy reversals by the Government would create an atmosphere of mistrust among exporters making it impossible for them to enter into export commitments.
Shri Saran informed that in view of the seriousness of the situation the Council has already appealed to the Prime Minister to reinstate the previous rates of DEPB and if this is not possible, to give at least three months time for the new rates to be effective so that the exporters get some time to adjust themselves to the new rates.
