The textile sector, hit badly by the ongoing demand slowdown in the Western markets, can look forward to some additional sops in the forthcoming foreign trade policy. The government is considering an increase in the input duty reimbursement given to textile exporters, a commerce department official has said. The sector was given an extension in the export credit interest subsidy scheme and a higher allocation for the technology upgradation fund in the Union Budget announced earlier this year.
The proposed increase in input duty reimbursement, under the duty drawback scheme, would help the sector price its products more competitively in the increasingly cut-throat global market.
Speaking to ET, a commerce department official pointed out that textile exports, which account for about a tenth of India’s total exports, had declined by about 10% over the past few months. “The textile sector certainly needs some more hand-holding by the government. We are looking at the possibility of increasing the drawback rates,” the official said.
Commerce and industry minister Anand Sharma had earlier said that the government would give support to the labour-intensive manufacturing industry, which includes the textile sector, employing an estimated 35 million people.
According to Fieo director general Ajay Sahai, there is a valid case for increasing drawback rates (which is calculated on the basis of various input taxes paid by exporters) as there has been an increase in excise for manmade fibre. Moreover, all competing countries, including Pakistan, China, Vietnam, Bangladesh and Turkey, had also increased sops to the textile sector, he said.
Talking on the same line, confederation of Indian textile industries (CITI) secretary general D K Nair pointed out that China’s VAT refund for the textile industry, which ranged between 9% and 11% before July 2008, has been increased to 15% in about three instalments. The same kind of increase has also happened in Pakistan. “We can’t continue to compete with these countries in the shrinking global markets if we do not get similar support from our government,” Mr Nair said.
The foreign trade policy—which lays down the rules for carrying out exports and imports and spells out sops—is expected to be announced by August-end.
