Duty drawback facility extended for textiles

Increases rates for home textiles, cotton products; the move will help raise textiles exports, says industry

The government has extended duty drawback facility for one year on all textile products to boost exports, and has increased rates in some cases for the benefit of Indian exporters.

In a notification dated November 1, the Central Board of Excise and Customs (CBEC) extended the duty drawback benefit for textile exporters to overcome the barriers they face in exports. CBEC revises drawback rates every year on November 1 for one year.

Under the revised norms, home textiles attract drawback of 7.5 per cent now as against 7.3 per cent earlier. Similarly, incorporation of blanket and other cotton products in this category will attract drawback rate of 8 per cent now from 7.2 per cent earlier.

"The revised drawback rates will certainly give a boost to exports of cotton textiles as they will provide adequate neutralization of the incidence of duties and taxes on the export goods and make them more competitive in the international markets," said R K Dalmia, Chairman, The Cotton Textiles Export Promotion Council (Texprocil), while welcoming the move.

The drawback rates and caps have been increased for made ups both made of cotton as well as cotton blended with manmade fibre. This is a step in the right direction as it will promote exports of value added products in line with the stated policy of the government, said Dalmia.

The drawback rates and caps for different types of cotton yarn have by and large been retained with no significant reduction. This has come as a major relief to the spinning sector which is currently under severe pressure due to various reasons.

The decision might help increase exports of textiles from India especially when textiles exports remained almost stagnant at around $42 billion. In the first half of the current fiscal, however, textiles exports recorded a decline.

Meanwhile, industry experts urged extension of this duty drawback facility to fabric sector also which would help recovery in spinning sector.

"There should have been some increase in the drawback rates for fabrics as India is fast emerging as a manufacturing hub for these items. The government has also been keen to promote investments in the weaving sector. Further, un-rebated state levies should also be refunded through the drawback route for yarns, fabrics and made ups as in the case of apparels. We will take up this issue with the government soon," an industry expert said.

The industry held the government's move as progressive for the entire textile sector.