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Duty drawback rate increase to boost textile exports from India

Dilip Kumar Jha/Mumbai 08 Dec 18 | 05:08 PM

In a major boost for Indian textile exports, the government raised duty drawback rates for all segments to enable exporters to tap global markets with full potential and enhance textile and apparel shipments from India.

Effective immediately, the Union Ministry of Commerce on Friday raised duty drawback rates across all varieties i.e. cotton, manmade fibre (MMF), nylon, yarn, fabric and others to cover entire value of textile sector with a major aim to boost their exports from India. 

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Duty drawback rates have been raised by up to 70 per cent across all varieties of textile value chains.

After a long period of dullness, textile and apparel exports from India jumped by a staggering 33 per cent between April and October 2018 due to spurt in the demand from the United States. India’s textile and apparel exports jumped significantly to other regions including the Middle East and Far East also. India is also exploring export potential to new markets.

“The revised drawback rates will lead to increase exports of cotton textiles and other products in the value chain. There is a significant increase in the drawback rates for cotton made ups which will encourage export of value added products like home textiles. 

Further, removal of drawback caps in the case of those export products where the drawback rates are less than 2 per cent will benefit the cotton textiles exporters," said K V Srinivasan, Chairman, The Cotton Textiles Export Promotion Council (Texprocil)

India’s textile and apparel exports jumped by 38 per cent to Rs 203.52 billion in October 2018 from Rs 147.77 billion in the same month last year. While overall textiles exports posted a jump of 28 per cent, shipment of apparel from the country shot up by 54 per cent in the month under consideration.

Texprocil, meanwhile, urged the government to increase the Merchandise Exports from India Scheme (MEIS) rate for fabrics from 2 to 4 per cent and also to cover cotton yarn under the MIES apart from 3 per cent Interest Equalization Scheme so that exports of cotton textiles can achieve its true potential.

“The increased drawback rates will provide relief to the exporters. In the view of the significant duties / taxes embedded in the manmade fibre (MMF) textile segment, the drawback rates declared now need to be enhanced at least up to 6 to 7 per cent from the existing 1 – 3 per cent," said Sri Narain Aggarwal, Chairman, Synthetic and Rayon Textiles Export Promotion Council (SRTEPC).

The increase in duty drawback rates would help the exporters face the competition in the overseas market. The maximum increase of Drawback rates on MMF textiles is by about 1.5 per cent and also the product of Nylon Filament Yarn (dyed) has been added under drawback scheme.

India’s textile and apparel exports stood at $39.2 billion in the financial year 2017-18 and is expected to increase to $82 billion by 2021.

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