Home India News Government urged not to cut duty drawback rates

Government urged not to cut duty drawback rates


New Delhi: Indian exporters Saturday urged the central government to defer its decision to cut duty drawback rates, saying it would negatively affect exports of items like textiles, leather and handicrafts.

“Reduction in rate will further affect the export of sectors which are showing negative or single digit growth. Reduction of drawback for apparel, leather, metal handicrafts, carpets, low-end engineering products will have a bearing on employment, as these sectors have high employment intensity and are largely dependent on overseas markets,” president of the Federation of Indian Export Organisation A. Sakthivel said in a statement.

Sakthivel urged the government to increase duty drawback rates of these sectors as they are facing strict competition and price war in exports.

The government has announced that it would cut duty drawback rates by 15 percent from Sep 20.

Chairman of Apparel Export Promotion Council (AEPC) Premal Udani said the industry was deeply disappointed over the proposed cut in rates.

“In this scenario, the industry fails to understand the rationale of reduction of duty drawback by 15 percent when duties were increased by over 25 percent and fresh additional duties were also levied on inputs,” said Udani.

Under the duty drawback scheme, the government reimburses all central duties, including customs and central excise paid on inputs, and service tax paid in the manufacture of export goods. There are multiple schemes to reimburse the export sector for its tax payments.

Udani said instead of reducing the duty drawback rates, the government should raise it to help exports of labour intensive sectors.