apparelindia - Apparel Export Promotion Council

AEPC Initiatives
AEPC Chairman sends proposal to Commerce
Secretary for boosting garment exports from India
Proposes measures to enhance 100% garment exports in 3 years, and 10% within 2012-13
Dr. A Sakthivel, Chairman AEPC, on behalf of the garments and textiles exporters submitted the proposal to Shri S. R. Rao,
Commerce Secretary in the Department of Commerce, Government of India. Speaking on the proposal, Chairman AEPC said that,
“We have learnt that Ministry of Commerce/Ministry of Textiles is likely to announce certain sops to the garment industry in order to
face challenges on global slowdown. I am providing herewith further details of my proposal”
Proposal 1
Cotton yarn be permitted imports without license at flat fixed customs duty rate, equivalent to all industry rate of duty drawback. Exports of
finished product made from such imported yarn be allowed at corresponding rate of duty drawback. For example, import of cotton yarn be
allowed at flat 3% rate (rate of duty drawback) or dyed cotton yarn be allowed at flat rate of 3.5% (rate of duty drawback). Exports of garments
made from such cotton yarn be allowed at drawback of 7.9% on FOB (rate of duty drawback).
Proposal 2
Fabrics be permitted imports without license at flat fixed customs duty rate, equivalent to all industry rate of duty drawback. Exports of finished
product made from such imported fabrics be allowed at corresponding rate of duty drawback. For example, import of cotton fabrics be allowed at
flat rate of 4.5% (rate of duty drawback). Exports of garments made from such cotton fabrics be allowed at drawback of 7.9% on FOB(rate of
duty drawback). On the issue of price stability in cotton yarn and fabrics, Chairman AEPC proposed that the import of cotton yarns and fabrics at
fixed customs duty, equivalent to rate of drawback rate, may also be permitted and drawback may be allowed on export of readymade garments
manufactured from such imported cotton yarn/fabrics at pre-determined drawback rates, he added.
Dr. Sakthivel further proposed that, In order to protect the interest of the Government, garment exporters, member of AEPC may be permitted
imports of yarn/fabrics maximum to the extent of 25% of their export performance in the preceding year.
The countries, which have attained good growth in garments are
listed below:
Country 2005 (Exports) US$ 2012 (Exports) US$ growth%
Bangladesh 3 Bn 20 Bn 566.67%
Vietnam Almost negligible 12 Bn Infinity
Cambodia Almost negligible 6 Bn Infinity
India 5 Bn Approx 13.5 Bn 170%
Bangladesh, Vietnam and Cambodia do not have raw material of
their own and they have achieved phenomenal growth through easy
import policy of yarn and fabrics. The current scheme of advance
license in the Foreign Trade Policy of our country, although allows
duty free import but it is a tedious route and is not used extensively
by the exporters. Under the proposal, new fabrics / yarns, which
are not produced in India will also get manufactured and in times
to come even these yarns / fabrics will be produced indigenously
substituting imports.”
“Under this proposal, the procedural hurdles which are faced by
SMEs in obtaining and closing advance licensing route for the imports
would automatically get solved at one hand and on the other hand the
imports for export manufacturing would be subjected to import duty
(nil in the case of advance licensing scheme). This proposal would
automatically lead to grant of full duty drawback at the time of value
added exports in the shape of garments since inputs in the shape of
yarn / fabric are subjected to payment of customs duty.”
Chairman AEPC commented that “Under the proposed measure,
it is projected that the garment exports would grow at 10% in the
balance period of 2012-13 and would also grow phenomenally by
100% in next 3 years with this scheme in operation. It is requested
that proposal as requested above may be considered, in the interest
of export promotion so that the garment export industry continues
to give employment to 11.22 million workers, besides generating
precious foreign exchange for the country. This would greatly help in
reducing our trade deficit.”
10 APPAREL INDIA