Duty drawback withdrawal distresses Punjab textile industry

The recent announcement by the Central government to withdraw duty drawback at the rate of 4% has upset the Punjab textile sector, particularly small-scale textile manufacturers in the state.

"Withdrawal of duty drawback benefits, following the suspension of duty entitlement pass book (DEPB) at the rate of 7.67% on cotton yarn, has come as a major setback for small-scale units. Such a measure would contradict the basic aim of the scheme that was introduced to offer a level-playing field to textile players in the global market," said Rajiv Sharma, general manager (marketing) of Ludhiana-based Aarti International, a textile manufacturing unit, which is a member of the Northern India Textile Mills' Association (NITMA).

Industry players further argue that the Central government's move to withdraw the duty drawback questions the objective of the scheme, which has been designed to reimburse central indirect taxes borne by manufacturers on the inputs used to manufacture export products.

"Sop withdrawal will only aggravate matters for SME textile manufacturers in Punjab, who are already suffering due to frequent power cuts and scarcity of labour," said Yashpal Singh, director of Hemant Traders, a small-sized textile trading agency in Jalandhar.

With the announcement of the government's decision to suspend 4% duty drawback ad valorem, several small textile units will no longer be able to make optimum gains from exports as compared to earlier days.

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