Punjab textile industry flays sop withdrawal

The textile industry of Punjab — already passing through a rough patch due to frequent power failures and labour shortage — is distressed due to withdrawal of duty drawback of 4 per cent by the Centre as per the announcement on April 29 this year.

The government had earlier withdrawn 7.67 per cent duty entitled pass book (DEPB) on cotton yarn and now withdrawn duty drawback. According to Ashish Bagrodia, a prominent exporter from Punjab and president of North India Textile Millers’ Association, duty drawback was not an incentive; but only refund of duties given for all the commodities with an objective of not levying export duties and creating a level playing field in the international market.

He further said that the government itself is questioning the rationale of its scheme which is essentially meant for reimbursing central indirect taxes suffered at the input stage in the manufacturing process.

He added that yarn manufacturers had reduced the price from Rs 175 to Rs 170 per 30 count with effect from May 1, 2010 on the recommendation of the ministry of textile to facilitate the growth of garment and handloom industry.

“We cut the price with a pinch of salt. We could earn slightly more from export than from the domestic market due to the duty drawback of four per cent advalorem but the new policy is against the growth of textile units”.

The millers raised voice two years back when the minimum support price for cotton was raised by 40 per cent in a single shot. This, they said, really undermined their operations. The next jolt came in the form of National Rural Employment Guarantee Act (NREGA) that created employment opportunities for the migrant labourers and industry had to revise the wages to retain them.

Power shortage in Punjab in summers adds to the cost as mills are run on captive power that is three times costlier than power drawn from state utilities.