AEPC seeks sops to tide over value loss in exports

Coimbatore, Nov 5 The Apparel Export Promotion Council (AEPC) has sought sops from the Centre for a temporary period to offset value losses suffered by the garment sector due to the appreciating rupee.

The Council, which has presented a charter of demands spelling out the relief package to the Government, favoured refund of state-level taxes that total up to six per cent of their cost through the drawback route, reducing the rate of interest for packing credit and a dual currency rate (with a higher rate for exports).
Relax labour laws.

The AEPC is also pressing the Government for refund of service tax paid by the exporters and relaxation in labour laws thereby allowing contract labour by the garment industries. These reliefs could be allowed for a limited period to enable the garment sector get over the current difficulties it faces from the declining dollar value.

The AEPC Chairman, Mr Vijay Agarwal, in a statement maintained that even if the Government conceded to all its demands, it would part with only the uncollected taxes amounting to between Rs 1,800 crore and Rs 2,000 crore and the Government would not actually encounter any cash outflow.

Highlighting the current crisis facing the garment exporters, Mr Agarwal pointed out that on top of the export trade losses seen in the past six months when the dollar slid against the rupee from the Rs 46-Rs 47 band to Rs 39.50, the international buyers were refusing to enter into any other currency contract, including the euro, and this had added to the exporters’ woes.

The negative impact on the trade could be already seen from the garment export data of the Ministry of Textiles.

The export of readymade garments had declined almost 17 per cent from $2.4 billion to $2 billion in April-June 2007. The knitted garments slipped by 12 per cent (from $906 million to $800 million), the export of woven garments fell sharply by 17 per cent (from $1.5 billion to $1.25 billion).

The AEPC Chairman said the silver lining had been the decision of the Central government to extend the technology upgradation fund scheme up to 2012 and this would encourage new investment in the textiles and apparel sector. The garment manufacturers would stand to get 10 per cent capital subsidy in addition to 5 per cent interest subsidy for the investment on machinery under the TUFS.