Continuation of Service Tax, hike in education cess disappoints GEA

New Delhi, Mar 1 (UNI) Garment exporters today expressed disappointment over continuation of Service Tax on exports and additional hike in imposition of education cess in the Union Budget 2007-08 that will greatly affect the competitiveness of Indian garment exports in the world market.

In a statement, Garments Exporters Association (GEA) President Vasdev Loond said that continuation of service tax and increase in education cess from 2 to 3 per cent are very discouraging and disappointing as these will mount the cost of manpower.

He said globalisation is already affecting the small and medium size exporters due to lower purchase prices from the buyers, shorter lead time, keen competition from China.

Mr Loond felt that ''Government is buoyant by the 9 per cent growth but is insensitive to the suffering of the garment exporting community.'' GEA President, however, welcomed the extension of technology Up-gradation Funds for five years with enhanced allocation of funds from Rs 540 crore to Rs 910 crore during 2007-08, reduction in custom duty on polyester and yarns from 10 to 7.5 per cent and outlay of Rs 430 crore for scheme for Integrated Textile parks.

He said ''these steps are in the right direction''.

Mr Loond urged the Government to assist and accelerate the building and functioning of SITPs and SEZ and reconsider wtihdrawing service tax on garment exports which will not only help in boosting exports but will also provide immense and continued employment to the poor section of the society in particular.

He said even the approach of Fringe Benefit Tax has been half-hearted as expenses of the export sector have not been exempted.

On the whole, Mr Loond said, the GEA is disappointed as no specific measures have been announced to reverse the recent downturn in garment exports.

UNI