Denial of ‘third party exports’ benefits under EPCG scheme worries entrepreneurs

March 24, 2015 12:00 am | Updated 05:38 am IST - Tirupur:

Entrepreneurs in textile sector are worried over the denial of permission for ‘third party exports’ for satisfying the export obligations under Export Promotion Capital Goods Scheme in various cases.

Machinery import

The said rule allowing ‘third party exports’ was making it possible for those units such as spinning and wet processing firms along the garment production chain to import machinery under the EPCG scheme without duty.

Such units were availing themselves of the duty-free benefits, even though they have not been exporting any products directly, by using the export performance of their customers who were the end-exporters of the garments.

Under that rule, importers of the machinery were stipulated to fulfil certain documentary procedures so that they could purchase the machinery from abroad without duty under Bill of Entry.

Licence number

“All they have to do is at the time of imports, their EPCG licence number should be shown and the end-exporter of garments will mention the same licence number of the importer of machinery in export documents to enable the spinning and wet processing units to substantiate their claim for duty-free imports at a later stage,” S. Dhananjayan, an industry consultant, pointed out to The Hindu .


Prabhu Damodran, secretary of Texpreneurs Forum formed of different stakeholders in textile industry, said a representation had been made to the Union Ministry of Commerce to ensure that the facility be made available to all for duty-free import of machinery considering the need for upgrading machinery which were costly affair.

“Just because some violations occurred it is not wise to impose any denial or temporary ban on the incentives itself,” he added.

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