Exporters in the Tirupur knitwear cluster say it will be impossible for them to compete with ‘tariff advantaged’ countries without ‘lifeline support’ through schemes such as duty drawback and Rebate on State Levies (ROSL).
In a representation to Union Minister for Commerce and Industry Suresh Prabhu, president of Tirupur Exporters’ Association Raja M Shanmugham highlighted the plight of exporters since the reduction in the duty drawback rate last October.
Stating that there is no level playing field for the garment manufacturers in India to compete in the global trade because the tariff advantaged countries enjoyed duty-free access on exports to the European Union and the US, he said, “Indian exports are subjected to a levy of 11.40 per cent.”
“Bangladesh’s apparel exports is four times that of India’s share in the global market, primarily because we are unable to compete on the price front. With the introduction of GST and the timeline fixed for replacing duty drawback scheme with GST refund mechanism, there has been a total chaos. The small lifeline support that we enjoyed is also lost,” Shanmugham said.
“The ROSL rate was halved from 3.5 per cent to 1.7 per cent and the service tax component of duty drawback at 0.21 per cent was withdrawn from July 1.2017. Besides this, the excise portion of duty drawback of 5.7 per cent was also withdrawn from October 1. All this has resulted in a bottom line hit of 5 to 7 per cent for the apparel sector,” he added.
The association has also appealed for WTO-compatible incentives.