Apparel exporters demand duty drawback hike

An apparel export promotion body has called for increase in duty drawbacks of about 4-4.5 per cent to mitigate embedded taxes paid by exporters.

After the implementation of the GST, exports of apparel have declined, owing to two factors -- lowering of the duty drawback rate from 11 per cent to about 3.7 per cent, and non-disbursement of the drawbacks.

"We still find there is a gap of about 4-4.5 per cent of duty. We are paying embedded taxes in products like seeds, besides electricity duty and taxes on diesel, but are unable to recover them, which is weakening our comepetitiveness," Apparel Export Promotion Council Chairman H K L Magu said.

He was speaking on the sidelines of Indian Chamber of Commerce-organised Retail India Summit here.

Magu said if the government agrees to their demand of raising the duty drawbacks or GST refunds, it would translate to around a Rs 5,000-crore boost for the sector, a major employment generator.

He said in the first nine months of the current fiscal, the sector registered a decline in exports compared to the previous fiscal.

During April-September, apparel exports were down 9.6 per cent in dollar terms as against the corresponding period a year ago.

"It is only since October that things have started looking positive, as demand is rising and GST refunds have started getting released," Magu said.

He said fiscal 2018-19 is likely to be flat for apparel exports at about USD 17 billion, if the growth trend sustains for the remaining months.

The month of November saw a jump of 20 per cent in rupee terms and 9 per cent in dollar terms compared to November 2017, he added.