Garment Exporters Likely To Be Allowed To Import Raw Material

The Centre is chalking out a special scheme to allow garment exporters to import raw material for the first time, in a bid to push up value addition in price, K L Madan, chairman of the Apparel Export Promotion Council (AEPC), said here yesterday.

Talking to reporters after attending the India Knit Fair97, Madan said The ministry of textiles has responded positively to the demand of exporters to allow such imports, including high class fibre. This is going to help exporters of apparel to compete internationally. The scheme may be announced soon.

Madan said the new scheme may take into consideration suggestions by Tirupur Exporters Association (TEA) president A Sakthivel that garment exporters be allowed to import upto two per cent of their export earnings in the previous year of raw materials, consumables, accessories and embellishments, without any import duty and any import licence.

 

Sakthivel, in a memorandum to the Centre, had stated that this would allow smooth flow of export goods, as well as, enable exporters to develop new products, styles and fashions in garments, making use of the latest raw materials in developed countries.

Madan said garment export figures made available for April 1997 indicated that there had been a negative growth of 14.75 per cent in dollar value terms for garment exports, while the growth rate in terms of quantity was 0.60 per cent. This indicated an `alarming fall in unit value realisation and the fact that Indian exporters were still catering to cheaper goods. Under these circumstances, the new scheme being worked out by the government could prove a boon for garment exporters, he said.

AEPC chairman said despite the constraints being faced by exporters in importing raw material, the collections displayed at the fair had been excellent in terms of quality, design and construction of fabric. As many as 60 leading knitwear exporters participated in the fair, organised jointly by the AEPC and TEA.

Madan said that garment exporters had sufficient entrepreneurial skills to double exports by 2002 to $9.5 billion, but if the government came out with positive policy initiatives and inputs by acceding to the demands of the industry, exports could easily be tripled to $15 million by the same period on a projected growth rate of 20-22 per cent.

He urged the government to reduce customs duty on fabric as a short-term measure to diversify the fabric base.

In the long term, he said, industries manufacturing synthetic yarn should be given deemed export status, including tax concessions and duty reliefs to enable them to supply yarn to exporters.

Madan said there was a need for modifying the export promotion capital goods scheme to reduce the limit from the present Rs 20 crore to Rs 1 crore. He wanted removal of the upper ceiling limit on investment for the small-scale sector to encourage them to modernise with the help of soft loans at international prices from the proposed modernisation fund to be announced by the government.

Madan said the AEPC was in favour of the government exempting quota premiums from tax under 80 HHC, so that they do not attract customs duty. This would make exports more lucrative.

He said finishing, processing and dyeing units should be strengthened by offering them 100 per cent depreciation and zero point duty on capital goods.

Referring to the growing preference of foreign countries for eco-friendly dyes, the AEPC chairman said decentralised textile industry would have no option in future to make an effort to produce them. Already exporters were required to give a declaration to buyers in Holland and Germany that they were using azo-free dyes.

Keeping these trends in view, the AEPC had opened 18 laboratories to test eco-friendly dyes. Till date, swatches were being sent to Hongkong for such tests. Four or five more such laboratories would be set up in various parts of the country and the government was being approached by the AEPC to subsidise testing costs which were on the higher side now, Madan said.