Garment exporters demand continuation of export sops

New Delhi, Jul 10 (UNI) Garments Exporters have expressed serious concerns on the recently proposed the Government move to withdraw some of the export sops granted during 2007 to exporters to help them overcome the financial crisis.

The 2 per cent interest rate subvention on export credit and status quo on the drawback and DEPB rates should continue because of steep hike in production cost of exporting units due to high rate of inflation which has registered about 12 per cent increase and is still going higher, says Mr Surinder Anand, Executive Secretary, Garment Exporters Association (GEA).

He observed that if the interest rate and drawback and DEPB rate are rolled back, the exporters will not be able to absorb the additional expenses in view of rising production cost and increasing transaction cost which is one of the highest in the world.

As the competition for a large global share has become more intense during 2008, the Government should refund State Government's levies amounting to 6 per cent.

Service Tax applicable to export related activities should be withdrawn. Pre-shipment and post-shipment credits should be made available to the export sector at 6 per cent rate of interest, he added.

The Government should also treat the exporters, who export 100 per cent of their production irrespective of their location at par with 100 per cent Export Oriented Unit's (EOU's) and also to allow duty-free import of textile machinery. The Government should encourage large scale investment in infrastructure and take effective steps to reduce the production and transaction costs by providing adequate fiscal and commercial relief to exporters.

The Executive Secretary further suggested that the Government should also make efforts to ensure financial stability in the external sector along with the much emphasized need for price stability in the domestic sector.

According to Mr G S Madan, Managing Director, Madan Trading Co, the garment export had suffered a serious setback when the rupee appreciated very sharply by as much as 12 per cent in six months.

This had resulted in many overseas buyers moving their business to countries like Bangladesh, Vietnam, Cambodia and China where they managed cheaper prices.

Mr Madan has, therefore, urged the Government not to withdraw the export benefits at this juncture when the exporters have registered a lower turnover and already lost their export business to other countries during 2007-08 and uncertainty about the future performance as later part of the current year portrays a very gloomy picture.

Reacting sharply to the Government's proposed move to withdraw some of the export benefits, Mr Pritam Goel, Managing Director, Lyra Industrials, pointed out that the time has not yet come to withdraw the concessions provided to the exporters as the main problem confronting the export sector is recent increased production and transaction cost and the ongoing fluctuations in the rupee rate against dollar.

As a result, exporters are not inclined to enter into the long term contract and negotiate new contracts. The foremost challenge is the combination of increasing recessionary pressure in US and consequent global slow down. The rising inflation is another major internal challenge to growth, particularly when the Government is inclined towards inflation control rather than the growth.

In view of the increasing international competition, garment exporters have not been able to negotiate overseas contract at reasonable prices. In fact the stiff competition amongst the Asian export countries has resulted in lower export realization from overseas markets.

As the garment exporters are still passing through a difficult phase, Mr Goel has suggested that more fiscal and commercial benefits should be provided to garment exporters including higher duty drawback rate, adequate and need-based bank credit at reasonable rates and refund of all state and central taxes to exporters.

UNI BBS MP HS1707