Exporters disappointed over duty drawback reduction New Delhi, Aug. 30 Exporters by and large have voiced concerns over the revised all-industry draw

New Delhi, Aug. 30 Exporters by and large have voiced concerns over the revised all-industry drawback rates for 2008-09 announced by the Finance Ministry on Friday, stating that the general reduction in duty rates was a disappointment as it came at a time of weak external demand and also when the export credit subvention scheme was set to be withdrawn by the Government.

“The new rates have come at a time when most export industries are in bad shape. The reduction in drawback rates will adversely impact sectors like textiles,” Mr Ganesh Kumar Gupta, President of Federation of Indian Export Organisations (FIEO), told Business Line.

He said FIEO expected the Finance Ministry to pay heed to the submissions of various economic ministries like commerce and textiles to continue with existing drawback rates for some more months rather than bringing about changes in such rates. Mr Gupta said there has been a general reduction in drawback rates in most of the items.

General reduction

The sectors where there have been a general reduction in drawback rates include textiles and textile articles, leather and leather articles, metals and articles of metals and bicycle and bicycle parts.

Drawback rates of polymers (HDPE, LDPE and polypropylene), linear alkyl benzene (LAB) and purified terephthalic acid (PTA) have been reduced.

The rates have been increased from 7.6 per cent to 9 per cent and 6.5 per cent to 7.6 per cent on flax yarn and flax fabric respectively.

In textiles and textile articles, the Finance Ministry had reduced the drawback rate for higher quality silk fabrics from 10.8 per cent with a drawback cap of Rs 325 a kg to 9.8 per cent with a drawback cap of Rs 295 a kg.

The rate for fabrics of noil silk has also been revised downwards.

In the case of wool tops, woollen yarn and fabrics, the drawback rates have been decreased by about 18 per cent to 21 per cent.

The caps have also been revised downwards.

For grey cotton yarn, the new rate has been pegged at four per cent irrespective of the counts of the yarn.

cotton yarn

In the case of cotton yarn (dyed), the drawback rate is five per cent irrespective of the counts of the yarn, against six per cent (grey)/7.1 per cent (dyed) earlier. For cotton yarn of 60 counts and more, the earlier rate was 9.5 per cent (grey)/10.6 per cent (dyed).

As for cotton fabrics, the new rate is 4.6 per cent (grey)/5.5 per cent (dyed) with a drawback cap of Rs 14 a kg (grey)/ Rs 20 a kg (dyed). In the case of denim fabrics, the new rate is 5.7 per cent with a cap of Rs 21.5 a kg as against the earlier rate of 8.5 per cent with a cap of Rs 32 a kg.

In the case of synthetic/artificial filament yarn, only customs component of drawback rates has been prescribed.

The drawback rate for Synthetic Filament Yarn now is 2.2 per cent (grey)/2.6 per cent (dyed) and for artificial filament yarn 2.1 per cent (grey)/2.5 per cent (dyed) as against the earlier rate of 3 per cent (grey)/3.5 per cent (dyed) for both types of filament yarn.