In a boost for textile export, the government has included blended cotton yarn (both grey and dyed) for the benefit of duty drawback.

In a notification early this week, the Directorate General of Foreign Trade under the Ministry of Commerce and Industry said yarn (other than sewing thread) with less than 85 per cent of cotton and not for retail sale (grey and dyed) would attract duty drawback of three per cent (cap per unit of Rs 11.50) and 3.6 per cent (cap per unit of Rs 19.30), respectively, if the central value added tax (Cenvat) facility is not availed of by exporters.

Exports which have availed of the Cenvat facility on blended yarn (with less than 85 per cent cotton would get a duty drawback benefit of Rs 1.2 per cent (cap per unit of Rs 4.60) on grey and 1.2 per cent (cap per unit of Rs 6.40) on dyed.

This means cotton yarn with up to 15 per cent Man-Made Fibre (MMF) would get duty drawback. “This is a welcome move. Unlike earlier, synthetic yarn manufacturers would also get the benefit. The move would also help raise synthetic yarn production,” said R K Dalmia, Chairman of The Cotton Textiles Export Promotion Council.

The Council had urged the government to include synthetic yarn under the duty drawback scheme, to boost its export. The move would also address anomalies in the MMF segment.

However, some clarity is needed in the product coverage with regard to the classification of some high- valued items like “boiler suits” and “protective wear made of blend containing cotton and manmade fibres”, technical textile products, for which the market is growing.

On the interest equalisation scheme of three per cent all across, the government has largely resolved the problems faced initially by some exporters in getting the benefit from their banks.

However, some discrepancies continue with Indian cotton textile products in the world markets, with preferential treatment to competing nations like Bangladesh, Cambodia, Pakistan, South Korea, Turkey and Vietnam by major importers like the European Union.

Beside discriminatory import duties on Indian textiles in important markets, like China, Turkey and Canada. Due to this preferential access, Indian exporters do not get global market access.

Representative bodies on synthetic textiles and raw materials, including the Synthetic & Rayon Textiles Export Promotion Council (SRTEPC), Association of Synthetic Fibre Industries and Association of Manmade Fibre Industries, have urged the government to reduce excise duty on MMF.

Currently, six per cent excise duty is levied on MMF with Cenvat facility but none on producers that have not SRTEPC Chairman Anil Rajvanshi says he expects India’s MMF textile export to touch $10 billion (Rs 68,000 crore) in a couple of years, from the current $6 bn, if excise duty is exempted.

Source: Business Standard