New All Industry Rates (AIRs) of Duty Drawback for 2016-17 will come into effect from November 15, 2016 for various export products including apparel, textile and handicrafts as announced by the Department of the Revenue, Government of India. Though the GST is likely to be implemented during 2017, the Duty Drawback Committee headed by Dr. Saumitra Chaudhuri has put in a lot of efforts to get the inputs from the industry/exporters and arrive at the reasonable drawback rates for all the export goods.
In the case of apparel, though the rates have been retained at the same level (cotton garments 7.7%, blended 9.5%, man-made fibre 9.8%), the value cap for cotton garments has been increased from Rs. 103 per kg to Rs. 146 per kg while the same value caps of Rs. 110 per kg and Rs. 150 per kg have been retained for blended and man-made fibre garments. For made-up textiles, the drawback rate has been increased from 7.3% to 7.5% and the value cap per kilogram has been increased from Rs. 70 to Rs. 75. The duty drawback rates for cotton yarn during 2015-16 were 3% for counts less than 50s, 2.7% for counts 50s to 100s and 2.5% for counts 100s. For counts 50s to 100s, the rate has been increased to 2.8% while there is a marginal reduction in the value cap. The duty drawback rate for grey fabric has been retained with a marginal increase in value cap and for dyed fabric there is a marginal increase in duty drawback rate up to Rs. 7.00 per kg in the value cap.
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Tulles and other net fabrics, not including woven, knitted or crocheted fabrics; lace in the piece, in strips or in motifs, other than fabrics of heading 6002 to 6006. In handicraft sector, the rates for glass artware, papier machie, lace and lace goods have been increased marginally, however, for the remaining handicraft items the rates have been marginally decreased on percentage basis or kept same as last year. The drawback rates and caps for different types of cotton yarns have by & large been retained with no significant reductions. This has come as a major relief to the spinning sector which is currently under severe pressure due to various reasons.
The revised duty drawback rates encourage value addition. Textile and apparel industry has given a mixed response… Ashok Rajani, Chairman, Apparel Export Promotion Council (AEPC) is quite disappointed, told he Apparel Resources, “We were expecting at least of 2.5 per cent overall hike but new rates are not as per our suggestions and hopes.” M. Senthil Kumar, Chairman, The Southern India Mills Association (SIMA) however thanked the Government and the members of the Committee for considering the inputs given by the association for the different textile products and marginally increasing the duty drawback rates and value caps in general.
The duty drawback rates have been found to be satisfactory, however the exporters were expecting higher rates in metal ware items, said Rakesh Kumar, Executive Director, EPCH (Export Promotion Council for Handicrafts).
Welcoming the new drawback rates, RK Dalmia, Chairman of The Cotton Textiles Export Promotion Council (TEXPROCIL) said, “The revised drawback rates will certainly give a boost to exports of cotton textiles as they will provide adequate neutralization of the incidence of duties and taxes on the export goods and make them more competitive in the international markets.” Dalmia pointed out that there should have been some increase in the drawback rates for fabrics as India is fast emerging as a manufacturing hub for these items. He extended his gratitude to the members of the Drawback Committee & its Chairman for considering most of the suggestions made by TEXPROCIL including incorporation of a separate entry for “blankets made of cotton and manmade fibre”.
