Duty drawback to boost exports of expensive garments

The government has introduced duty drawback of 3.2 per cent to 4.7 per cent (depending on the category) for exports of non-fabric inputs made from imported fabrics under special advance authorisation scheme. This will boost export of expensive apparels made from imported fabrics.

Garment sector has welcomed the decision, saying the move will encourage exporting units to enhance production. A senior executive in a knitwear unit in Tirupur said, "The garments produced out of specialty fabrics imported under this scheme will be competitive since the units are getting additional benefits through duty drawback rate. This will also attract more exporting units to enhance manufacturing of the products using specialty fabrics which have a good market abroad."

Chandrima Chatterjee, advisor, Apparel Export Promotion Council (AEPC), said, AEPC had requested the government to consider expansion of duty drawback because apparels made from imported fabrics under advance authorisation attract various other taxes on inputs. Duty free import of fabrics under special advance authorisation will be allowed for export of apparels covered under Chapter 61 and 62, subject to terms and conditions.

The authorisation will be issued based on standard input output norms (SION) or prior fixation of norms committee. The authorisation shall be issued for the import of relevant fabrics, including inter lining only as input. No other input, packaging material, fuel, oil and catalyst will be allowed for import under the authorisation.

Exporters will be eligible for duty drawback on non-fabric inputs as determined by the government. Authorisation and the fabric imported shall be subject to actual user condition. The same shall be non-transferable even after completion of export obligation. The fabric imported shall be subject to pre-import condition and it shall be physically incorporated in the export product (making normal allowance for wastage). Only physical exports shall fulfil export obligation.