Goods and Service Tax and reduction in duty drawback have proved a double shock for the exporters of ready-made garments. The exports from the city have reduced by nearly 40 per cent as compared to last year.
Exporters are blaming sharp reduction in duty drawback from 7.7 per cent to 2 per cent and for made-ups the duty drawback earlier was 7.4 per cent which has also come down to 2 per cent as a major reason behind the fall in exports. Exporters demand that keeping in view the present scenario government should have extended the transitional provision for duty drawback and rebate of state levies (ROSL) till the start of next financial year.
Delay in the GST refunds remains the major concern for the exporters. “Serious working capital problems are being caused due to delay in the GST refunds. Shipment has been done but the exporter is yet to receive the refunds which are causing a problem,” said Vinay Kansal, a small garment exporter. Satish Verma, who is also an exporter from the city, said, government should reconsider the rates of duty drawback and should be reverted back to the previous rates if the government wants the export to flourish.
“On one side, the GST was imposed in readymade garments, and to make the matter worse, the government had decreased the rates of duty drawback rates. In the present scenario, we are unable to compete with other countries. Increase in export is possible only when the government increases the duty drawback rates,” he said.
In 2016, the Union Government had announced a special package to boost export of garments and made-ups and drawback rates were enhanced under this package. “With the reduction in drawback rates, these benefits have been pulled off. Drawback rates should be worked upon again for the benefit of the industry,” said Arun Thapar, another garment manufacturer.