Now that jobs are facing the axe in the textile and apparel sector (T&A) due to rising rupee and competitiveness in the international arena is diminishing, Apparel Export Promotion Council (AEPC) has presented a charter of demands seeking sops and rebates for a temporary period to overcome the rupee rise.
The rupee, which was trading in the region of Rs 46-47 against the dollar has appreciated to about Rs 39.50 in less than 6 months time.
“We have presented a charter of demand to the ministry of textiles seeking sops for a period of 6-12 months to enable us to tackle the grave crisis facing the T&A sector,” said Vijay Agarwal, chairman, AEPC. Among the demands of the sector include refund of all state level taxes through the drawback route which total up to 6%, make packing credit cheaper by reducing the rate of interest on the same, refund of service tax, a dual currency rate (i.e. the rate of currency will be higher for exports), providing 10% credit-linked subsidy and relaxation in labour laws to allow contract labour. AEPC has demanded these sops only for a limited time until the rupee stabilises, he said. The T&A sector, which is India’s largest net foreign exchange earner and the largest employer, has never been hit so badly. Recently figures issued by the ministry of textiles show that exports of ready made garments have shown a decline of almost 17% from $2.4 billion during April-June 2007 to about $2 billion.
The scenario for knitted apparels and woven apparel doesn’t inspire confidence either. Knitted apparel exports during April-June 2007 decline by 12% to $800 million from the corresponding figure of $906 million whereas there has been a decline of about 17% in exports of woven apparel from $1.5 billion to $1.25 billion
The council has welcomed the move to extend up to 2012 the Technology Upgradation Fund Scheme (TUFS) which will encourage investment in the T&A sector in the country. Garment manufacturers get a 10% capital subsidy in addition to 5% interest subsidy for machineries under TUFS. “Even if all our demands are met it will cost the government a maximum of Rs 1800-2000 crore – and that too in terms of taxes not collected and not by actual cash outflow,” he added.