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AEPC requests for drawback support for arresting decline in exports

A high level delegation of Apparel Export Promotion Council (AEPC) led by its Vice Chairman  HKL Magu met  Commerce minister Suresh Prabhu and apprised him about the major constraints being faced by the apparel exporters towards increasing exports from India.

The Council members took up with the Minister about the issue of non-reimbursement of embedded taxes under Rebate of State Levies (ROSL), Drawback (DBK) scheme which is making the apparel industry non-competitive in the international market. The council also informed the minister about the impact of overvalued Rupee on the Export Growth.

Exchange rate is an important competitive tool and the Council cited the issue of depreciation in the value of currencies of the neighboring countries like China, Bangladesh and Vietnam during the last six months which made their goods more competitive than Indian products in the overseas markets.

A strong rupee has significantly diluted the impact of the Special package of Rs. 6000 crores for apparel industry and in order to encourage exports, it is necessary that rupee is depreciated in a calibrated manner to a level where India’s exports become competitive in the global market, urged the AEPC delegation during its meeting with the minister.

Talking to newsmen after meeting the Minister Mr. Ashok G Rajani, Chairman Apparel Export Promotion Council said, “The principle of zero-rating of exports is uniformly followed by all countries across the world.

However, such zero-rating of exports, as prescribed in the GST law, will not be complete and will be limited to refunding of input taxes as there are a number of GST taxes, which are  invisible and embedded in the FOB value of exports, given the design of the Indian GST.

Therefore, it is important that the refund of the blocked GST taxes should not be seen as an incentive, but as an enabler of trade neutrality. The minister has assured us every best possible support for the smooth growth of industry and we are hopeful that he will look into the concerns raised by the Industry”

In its meeting with the Commerce minister, the council members made suggestions about the Export policy. The council has suggested that the export policy should address the aspects of market disabilities and policy disabilities.

While the market disabilities for the apparel industry in India include the issues related to logistics cost and time, rigid labour regulations, lack of economies of scale and discrimination in export markets arising out of preferential trade agreements for competing countries in major markets such as the US and EU, the policy disabilities include tax and tariff policy which plays a major role in export performance.

The council in its meeting informed the Minister that while the government uses various ways and means to neutralize market based disabilities, the duty drawback facility is usually used to neutralize any tax and tariff disabilities. 

The members further suggested that for ensuring taxes are not exported, a system of Central and State drawback should be envisaged for the post-GST drawback system.

In central drawback system, embedded CGST taxes in the exempt/ excluded sectors, basic customs duties and Central excise duties on specified petroleum products should be included while in the state drawback system, embedded SGST taxes in the exempt/ excluded sectors, State VAT on specified petroleum products, electricity duties, stamp duties and registration charges, motor vehicle taxes,mandi taxes, green taxes, property taxes etc., should be included.

The Apparel Export Promotion Council (AEPC), Incorporated in 1978, AEPC is the official body of apparel exporters in India that provides assistance to Indian exporters as well as importers/ international buyers who choose India as their preferred sourcing destination for garments.

In recent years AEPC has worked in integrating the entire industry - starting at the grass root level of training the workforce and supplying a steady stream of man power to the industry; identifying the best countries to source machinery and other infrastructure and brokering several path breaking deals for its members.

It helped exporters to showcase their best at home fairs as well as be highly visible at international fairs the world over. With AEPC's expertise and all the advantages that India has, it makes for a truly win-win situation - Indian exporters grow stronger each year in their achievements, skills and proficiency, while international buyers get superior solutions for their garment imports.



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