EPCG scheme condition affects job working units, exports: TEA

Tirupur Exporters' Association (TEA) today requested Union Commerce Minister Nirmala Seetharaman to relax the condition imposed under Export Promotion Capital Goods (EPCG) scheme for fulfillment of export obligation by 'job working' units.
Job work is to do the work on behalf of other person on the material provided by him.
In a letter to the minister, TEA president, A Shaktivel stated that the job working units like knitting, dyeing, compacting, printing and embroidery in Tirupur cluster had been facing problems and were deprived of importing machinery, owing to the new clause under the scheme, which mandates fulfillment of Export Obligation by job working units.

Less than 30 exporting units in Tirupur had the integrated setup to carry out all the processes in their in-house and the remaining exporting units were fully dependent on job working units to carry out the intermediate processes, Shaktivel pointed out.
The objective of the EPCG scheme was to facilitate the import of capital goods for producing quality goods and as per the new conditions, EPCG holder may export either directly or through Third Parties and the bone of contention was that the goods exported through third parties should be manufactured by the EPCG authorised holder, he claimed.
"Under such circumstances, the job working units import machinery under EPCG scheme but do not export the products and just carry out the job works like Knitting, Dyeing, Calendering, Compacting, printing and Embroidery etc," the letter said.

In view of this, Shakthievl said the condition for fulfillment of export obligation under the policy, should be amended in such a way as to benefit SMEs, who carry out the intermediate processes, otherwise exports in Tirupur would be affected and would not be in a position to maintain its competitiveness.
Moreover, the SME exporting units, about 80 per cent do not have enough financial strength to install all intermediate processing machinery in their own units like corporate companies, he said.
Considering the fact, the minister should look into the matter and help bring amendments to the EPCG scheme in such a way that the export obligation can be fulfilled by ultimate garment exporter by the way of third party exports after relaxing the condition that the product manufactured by EPCG holder should be exported at least for the job working units functioning in cluster like Tirupur, Shaktivel said.