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Make us Competitive and Profitable: Garment Exporters

SME WORLD Bureau
Feb 2010

Garments exporters have called for an overall reduction in interest rates and corporate tax rates, besides removal of anomalies in excise and custom duties to reverse the recent slowdown in garment export industry.

As the international market, which was already highly competitive, has become tougher, Garments Exporters Association, in its Pre-Budget recommendations, has appealed to the Government to reduce the transaction cost and grant necessary fiscal and commercial relief for the garment sector of the Textile Industry to enable it to face increasing international competition.

According to Rakesh Vaid, President, Garments Exporters Association(GEA), the basic objective of the budget should be to make exports competitive as well as profitable. The wish-list of GEA from the Budget is that following GEA Pre-Budget recommendations would receive due consideration of the Finance Minister while finalizing the Budget proposals:-

GEA Pre-Budget Recommendations

1. To hike duty drawback rates by 5 per cent by increasing the scope and coverage of duty drawback scheme so as to ensure full reimbursement of excise duties, custom duties, service tax, education cess and various state level taxes.

2. To provide adequate and need-based funds to exporters at reasonable rates of interest which should not exceed 7 per cent as applicable to agriculture sector and restore 4 per cent interest rate subvention on export credit.

3. To restore 100% exemption to export earnings under Section 80 HHC of Income Tax Act at least for the next five years.

4. In view of acute power shortage, Government should encourage captive power generation by providing diesel at International prices and exempted from Excise Duty and Local Levies.

5. To exempt from Service Tax all the export related services to avoid blockage of capital of exporters, as the procedure for refund is time-consuming, resulting in unnecessary delays and harassment.

6. GEA would like the Government to implement GST (Goods & Service Tax), at the earliest.

7. The Custom duty on import of textiles machinery, accessories and fabrics should be abolished allowing free import at nil rate.

8. Import duty on manmade fibres to be reduced to zero, so that the garment exporters can get cheaper man made fabrics available in the country for manufacture and export garments at more competitive prices.

9. The Government should also arrange refund of State Levies on exports, amounting to 6% of f.o.b. value.

10. Apart from taxation relief, GEA would expect the Government to reduce the transaction cost by simplifying administrative procedures by avoiding delays at customs clearance of goods; improving loading and unloading of cargo and infrastructure at ports to avoid congestion at various ports.

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