Textile mills have appealed to the Union Government to reconsider withdrawal of the duty drawback on cotton yarn exports. The government issued a notification on April 29 in this regard.
Chairman of the Cotton Textiles Export Promotion Council V. S. Velayutham has said in a release that the duty drawback was a time-tested scheme aimed at reimbursing the incidence of customs and excise duties levied at the input stage of the product.
The WTO agreement on subsidies and countervailing measures permitted “exemption or remission of prior stage cumulative indirect taxes or import charges levied on inputs that are consumed in the production of the export product.”
According to Mr. Velayutham the government had dealt a severe blow to export trade and gone against its own principle of exporting goods and not taxes.
The Southern India Mills' Association chairman J. Thulasidharan has said in a release that the drawback was not an incentive.
It was only refund of duties and was given to all export commodities. Yarn price was determined by market forces depending on supply and demand and any move to bring artificial control on the intermediary products would affect the functioning of the entire textile value chain.
The member mills of the association have accepted the advice of the Union Textile Minister recently and agreed to reduce the yarn price.
The spinning sector had 15 per cent share in the global cotton yarn trade and with the recent moves of the Union Government, the mills would lose their customers.