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SIMA hails marginal increase in duty drawback rates

Jan 31, 2020
SIMA hails marginal increase in duty drawback rates

The government encourages exports by refunding various taxes and levies so as to make all the exporting commodities remain competitive in the globalised environment. For Indian exports, this is very much essential as India does not enjoy duty-free or concessional duty agreements with the top importing countries, while most of the competing Nations have such access. The government reimburses the customs duty and other central taxes that are not subsumed in the GST and levied on inputs used in the manufacture of exported final product by way of duty drawback. The Duty Drawback Committee periodically revises the drawback rates and the value cap (if any) depending upon the incidences of duties and taxes. Based on the recommendations made by the Duty Drawback Committee, the Government has announced the revised duty drawback rates vide Customs Notification No.07/2020-Cus (NT) dated January 28, 2020 giving effect from February 4, 2020.

Ashwin Chandran, Chairman, The Southern India Mills’ Association (SIMA) has thanked the Duty Drawback Committee and the Government for considering the inputs given by the textiles and clothing industry and enhancing the rates marginally across the value chain. Ashwin has stated that the duty drawback being a WTO-compatible export benefit, the scheme would help the exports to achieve a sustained growth rate provided the duty drawback calculation takes care of all incidences of duties and taxes.

The duty drawback rate for cotton grey yarn has been increased from 1.7 per cent to 1.9 per cent, for fabric from 1.6 per cent to 2 per cent, made-ups from 2.6 per cent to 2.8 per cent, apparel from 1.9 per cent to 2.1 per cent, thus encouraging value addition and benefit the predominantly cotton based spinning sector. Ashwin has stated that this might help to boost cotton yarn exports to a certain extent. He has appealed to the Government to remove the value cap for spandex yarn and certain categories of woven fabrics to encourage value addition.

SIMA Chief has added that it is essential to refund the State and Central levies that are not refunded under duty drawback calculations to make the cotton yarn and fabric exports competitive. He has said that the industry has been pleading the same from the inception of announcing Rebate of State Levies (RoSL) benefit for garments and made-ups. He has appealed to the Government to include cotton yarn and fabric under Rebate of State & Central Taxes and Levies Scheme (RoSCTL) to revive the spinning and weaving segments from the long drawn recession, utilise the surplus capacity, convert the surplus cotton into value added products and export and also create jobs for several lakh of people.

Ashwin has stated that the new Remission of Duties or Taxes on Export Product (RoDTEP) benefit would refund all the embedded/blocked duties and taxes and cover all the textile products viz., fibres, yarn, fabrics, garments, made-ups, technical textiles, etc., across the value chain to have a level playing field in the global market and remain competitive.