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Shri Kamal Nath, Union Minister of Commerce & Industry. has assured apparel exporters that the issue of reimbursement of all duties and levies on exports including apparel exports will be fully addressed in the successor scheme to the Duty Entitlement Pass Book (DEPB) Scheme which is currently being formulated so that Indian products can be fully competitive in the international market in the post-MFA textile regime beginning from 1/1/2005. Responding to concerns expressed by the Apparel Export Promotion Council (AEPC) at his weekend interaction here with exporters to review export performance, Shri Kamal Nath emphasised that “taxes and levies on exports are refunded by countries all over the world and reimbursement is not a subsidy. We export our goods and services, not our taxes and levies”.
In a presentation to the Minister, AEPC has made a number of suggestions for an alternate scheme to the DEPB, including a proposal to allow the Exim Scrip route in lieu of all industry duty drawback with the suggestion that Exim Scrips to be used by exporters for import of duty-free inputs for export production may be issued to the extent and at a rate prescribed for duty drawback. Another suggestion made by them is to enhance a coverage of areas for determination of duty drawback. Since at present only customs duty and excise duty are factored in for the determination of duty suffered on export production, and consequently there are several other taxes and levies for which rebate is not available, they suggested that, among other things, the following may also be factored in for the determination of duty drawback rates: incidence of excise duty on consumption of diesel in garment export industry; refund of cess levied on cotton seed as well as the cess on cotton consumed in any mills in India; and refund of sales tax, octroi, entry tax, and water tax for export production. They have also proposed that the garment export industry be exempted from service tax and education cess.
According to AEPC data, exports of readymade garments from India to the quota countries amounted to US $ 5243 million (i.e. $ 5.2 billion) during 2003-04 and the export target for the current year 2004-05 is US $ 6 billion. During the first quarter (April-June) of the current financial year 2004-05, garment exports have amounted to US $ 1394.60 million ($ 1.3 billion) showing an increase of over 11% compared to the same period of last year, as per the DGCI&S data. AEPC certification data available from April-November 2004 indicates an increase of over 22% in exports of Indian apparels to the US and over 16% to the European Union (EU). The total increase in exports during April-November 2004 in respect of quota countries is over 18%.
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