Textile min demands addl duty refund

The Ministry of Textiles wants the finance ministry to refund the additional 4 per cent Customs duty levied on export of textiles and clothing.

An official source said the textile ministry was in the process of taking up the issue with the Department of Revenue and its commerce counterpart.

The government had quantified the incidence of local and state government level duties at 4 per cent and has been levying an additional excise duty (goods of special importance) on imports.

The Confederation of Indian Textile Industry (CITI) has suggested that the government should refund 4 per cent free-on-board value of export, in addition to the currently available duty drawback, and recover this amount from concerned state governments.

"If the duty is refunded, it will be in compliance with the World Trade Organisation's provisions. This additional 4 per cent reimbursement will also help the industry to partly set off the loss being suffered by them due to rupee appreciation," DK Nair, secretary general, CITI, said.

The Planning Commission is of the view that the 4 per cent set off should happen. A source in the Planning Commission said a duty waiver would help Indian exporters to benefit from the end of the bilateral trade agreements between China and the European Union (EU), and China and the US in 2008. "The EU and the US are expected to take steps to restrict Chinese textile exports to their markets after that," he added.

The Ministry of Textiles had projected exports to touch $50 billion by the end of 2010. For 2006-07, the exports were expected to reach $19.73 billion, the ministry's annual report stated.

Earlier this month, CITI wrote to Finance Minister P Chidambaram asking for immediate measures to arrest the rally of the rupee.