The Tirupur Exporters and Manufacturers Association (TEAMA) has expressed shock over the Union Finance Ministry’s decision to reduce the duty drawback rates for textiles at a time when the industry was facing operational problems due to steep rise in cotton prices.
In the notification issued on Saturday, it was stated that the new rates fixed for 2010-11 would come into effect on September 20.
Accordingly, the duty drawback rate for cotton garments would be 7.5 percent of the Freight on Board value against the prevailing 8.8 percent.
"This is a big blow for the export units in the Tirupur knitwear cluster considering that they predominantly produce cotton-based knitwear," TEAMA president M.P. Muthurathinam said.
Likewise, the reduction in duty drawback rate for garments made of man-made fibres from 10.5 percent to 9.5 percent too would affect the prospects of Tirupur cluster since the entrepreneurs here had been on a transitional mode venturing more into man-made fibres in their pursuit to come out with 'all-season' garments.
"Reduction of rates have come as a big blow for the textile exports especially when we were expecting an increase in the duty drawback rates to remain competitive in the global market," Mr Muthurathinam said.