The Apparel Export Promotion Council has urged the Centre to immediately hike duty drawback rates to offset losses being incurred by exporters due to appreciating value of the rupee.
The council wanted the drawback rates to be increased from the present level of 8 to 10 per cent to at least 13.25 per cent on the grounds that the rupee has already strengthened by 10 per cent and the industry, financial institutions and experts were expecting it to further go up to 12 to 15 per cent in the next few weeks.
In a letter to the Deputy Chairman of the Planning Commission and Ministers and Secretaries of Finance, Commerce and Textiles, AEPC Chairman Rakesh Vaid said textile exporters in China have been able to offer a much better price for their products in the global market since the government there had increased drawback refunds from 11 per cent to 17 per cent over the past year.
Pointing out that garment exports during April to August this year had dipped 7.39 per cent, to $4.18 billion from 4.51 per cent in the year-on period, he warned, “with this pace, the country will not be in a position to touch an export performance beyond $9 billion”. [In 2008-09, the apparel exports out of India had totalled $10.17 billion].
Noting that the rupee is presently quoting at 46.10 per dollar against a level of 51.23 in March, resulting in a 10 per cent less realisation for exporters, Mr. Vaid said that keeping this trend in view, the industry had finalised exports during August and September at a rate of Rs. 48.50 per dollar.
The AEPC Chairman also stressed that the United States and Europe were still reeling under the global economic recession. “The Government’s efforts to penetrate new markets of Latin America, the Middle East and the Oceanic countries are on. But, it will take a long time before we set our foot firmly in these markets.”