Tirupur Exporters want 3% hike in duty drawback rates

The appeal was made by the Tirupur Exporters Association to the Duty Drawback Committee, which visited Tirupur,

Tirupur Exporters have requested the Duty Drawback Committee for 2013-14, set up by the Ministry of Finance, to consider for increasing Duty Drawback rates from existing rate 7.9%. The appeal was made by the Tirupur Exporters Association (TEA) to the Committee which visited Tirupur, the knitwear hub of India, on Wednesday.

The committee consisting of Saumitra Chaudhuri, Member Planning Commission and Chairman, Drawback Committee, S B Mohapatra (former Textile Secretary) Member, DBK Committee, T R Rustagi, Gautam Ray and Vinod Kumar Agarwal, Members Drawback Committee visited Tirupur on Wednesday.

A Sakthivel, president, Tirupur Exporters Association noted the decline of Knitwear exports in 2012 – 2013 due to recession in EU market and less off take in US market coupled with other adverse factors. He further pointed out the increase in dyes and chemicals and other input prices and added that despite increase in the cost of production, it could not be added up in the garment price and in fact the average unit value realisation of the garment has come down by 5.66% due to stiff competition in the International market.

The Association requested the committee to consider for increasing Duty Drawback rates from existing rate 7.9%. “We requested for three% more,” said Sakthivel.

The other participants including Premal Udani, Past Chairman, Apparel Exports Promotion Council and Ashok Rajani, Vice Chairman, Western region, AEPC and a few executive committee members of TEA expressed the need to increase in drawback rates.

It may be noted, after reporting negative growth in the last three years, the Rs 12,000 crore export textile industry at Tirupur has reported growth in exports during the first three months of 2013. The industry has attributed the growth to new markets, which were explored in the last 10-12 months.

Exporters from this tiny town, about 450 kms from Chennai, said that the Free Trade Agreement (FTA), which is expected to sign with the European Union anytime, will help them to compete with Bangladesh, which is now enjoying the duty free benefit.

Sakthivel earlier said the industry started seeing some sign of relief from January, from the old and new customers (mainly from the non-traditional markets).”

The industry, which exported garments worth Rs 12,500 crore last year, reported de-growth of around 10-15% in 2009-10 and 2010-11 and 2011-12 it was flat, thanks to Rupee appreciation against US Dollar. It may be noted, in 2006-07, when the industry clocked around Rs 11,000 crore it had set a target to reach $4 billion by 2012, however it could reach only $2.75 billion.

But the downturn, Rupee appreciation, increase in cost (power, transportation , yarn, logistics, diesel) and Madras High Court's decision to close down the dyeing units have hit the industry very badly post 2008 and the survival of the industry had become a question.

Industry representatives have said that the growth was mainly, due to contribution from non-traditional markets or new markets, which the industry ventured in the last one or two years. These markets including Japan, South Africa, Israel and South America.

The industry has also seen some sort of relief in the US markets along with new orders have started flowing.

“The concern is European market, which used to contribute around 50% to the industry,” said Sakthivel.

With the new order flows and opening of new markets, exports from Tirupur is expected to touch Rs 14,000 crore in 2013-14. While the order inflow comes as a good news, exporters are struggling to convert these enquiries to orders.