New Delhi, February 18: Ahead of the Budget 2011-12, Garment Exporters today asked the government to accord priority sector status to the industry in view of its high potential of employment generation, especially women workers and eliminate anomalies in exicse and custom duties relating to raw materials.
It argued that these sops are necessary to reverse the trend of slowdown of garment exporters, impacted by global uncertainities and concessions by India’s competitors to their textile and appareal exporters.
Garment Exporters Association (GEA) in a pre-budget memorandum to Finance Minister Pranab Mukherjee also called for reduction in interest rates and corporate tax rates.
The GEA said the international market, which was already highly competitive, has become even more tough for garment exporters due to various reasons.
Mr Rakesh Vaid, President, GEA, said a key objective of the budget should be to make exports competitive as well as profitable, as the rising raw material prices have been adversely affecting the export potential of garment exporters.
”Garments exporters are looking for some fiscal relief from the coming budget proposals to help them to overcome the present crisis,” he said.
It demanded hiking duty drawback rates by 5 per cent by increasing the scope and coverage of the duty drawback scheme so as to ensure full reimbursement of excise duties, custom duties, service tax, education cess and various state level taxes.
To provide adequate and need-based funds to exporters at reasonable rates of interest, the GEA said interest rates should not exceed 7 per cent as applicable to the agricultural sector and restoration of 4 per cent interest rate subvention on export credit.
The GEA called for restoring 100 per cent exemption to export earnings under Section 80 HHC of Income Tax Act at least for the next five years.
In view of acute power shortage, the government needs to be encouraged to go in for captive power generation by providing diesel at international prices and exempting from excise duty and local levies.
The GEA called for exempting from service tax all the export related services to avoid blockage of capital of exporters. It said the procedure for refund was time-consuming, resulting in unnecessary delays and harassment.
It favoured implemention of the Goods and Services Tax (GST) at the earliest.
The association demanded that the government needs to clarify how the GST mechanism will work for the exporters which are now benefitting from various tax reimbursements such as duty drawback, advance authorisation and advance licenses.
It said that the custom duty on import of textiles machinery, accessories and fabrics should be abolished allowing free import at nil rate.
It pleaded for reducing import duty on manmade fibres to zero level, so that the garment exporters can get cheaper man made fabrics available in the country for manufacture and export garments at more competitive prices.
The government needs to arrange refund of state levies on exports, amounting to 6 per cent of free on board value.
It wanted duty free import of ‘Tailor Dummy’ with ‘HS Code’.
The GEA wanted treatment of exporters who export 100 per cent of their product irrespective of their location at par with 100 per cent export oriented units.
It said the ‘Market Focus Product Scheme’ should be extended for exports to the United States and EU-27 countries for at least one more year.
The GEA asked the government to introduce a new wave of labour reforms with flexible labour laws as the existing laws are obsolete and antiquated. The present labour legislation has hindered the growth of labour intensive and export oriented garment industry.
It asked the government to treat the garment sector as a priority sector because of its large employment capacities providing opportunities, particularly to women and weaker sections of the society.
Apart from taxation relief, Mr Vaid has stressed the need to reduce the transaction cost by simplifying administrative procedures by avoiding delays at customs clearance of goods and improving loading and unloading of cargo and infrastructure at ports.
Mr Vaid has also requested the government to accept and implement the recommendations of task force on transaction cost on exports, which has made several recommendations to reduce the transaction cost to enhance the export competitiveness.
–Agencies