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The Southern India Mills’ Association

Committed to Foster the Growth of the Textile Industry

Garment exporters to be hit by reduction in duty drawback

Apparel exporters in Tirupur have sought increase in duty drawback rates and Rebate of State Levies (ROSL) rates as the Government recently reduced the drawback rates for ready-made garments. In a memorandum to the Prime Minister, president of Tirupur Exporters’ Association Raja M. Shanmugham said the reduction in duty drawback rates came as a shocker to the apparel industry. The rates were increased for cotton, yarn, and fabric but reduced for garments.
Traditionally, the government has been following a policy of encouraging apparel exports compared to other products in the value chain. Apparel sector is one of the largest job creators and more than 90 % of the apparel manufacturing units are in the MSME sector. “It is well known that for every crore of investment in apparel making, 70 jobs are created,” he said. The reduction in duty drawback now for garments and increasing it for other products is a deviation from the existing policy.
Effectively, there is 0.1 % to 0.2 % reduction in the rates. Though this might not affect exports directly, by increasing the drawback rates for other products in the value chain, the government is encouraging export of raw materials (yarn and fabric) to the competing countries. Apparel industry was seeing negative growth for continuous months since last July.
“We have sought restoration of the pre-GST level of rates,” Mr. Shanmugham told The Hindu . “We gave enough material to support our demand and to sustain competitiveness of the garment sector,” he added.
“We want the government to revisit its decision and restore the pre-GST rates,” he said.