There is a good news for textile and clothing industry, reeling under the continued rupee appreciation. The government is expected to announce a mechanism refunding state-level duties to textiles and clothing exporters.
?A draft note has been prepared by the commerce ministry which will be forwarded to 13th Finance Commission next month which in turn will devise the strategy,? a senior official in the ministry told FE.
He said this is the first time that trade and exports -related issues have been included in the business of the Finance Commission. The state-level duties amount to around 6% to exporters of textiles and clothing. It may be frozen at the present level and the scheme may be formulated in due consultation with states.
Another alternative suggested is that the Central government refund the levies paid to states and the same be deducted from the outlays made to state governments.
According to officials in the ministry this is being done as the textile industry has made a strong pitch after margins started declining following appreciation of Indian currency in dollar terms.
The textile industry has been demanding concession in transaction and power costs.
In the context of export boom witnessed immediately after quota abolition from 2005, the industry invested huge funds in capacity addition, now with exports becoming increasingly unviable, the additional capacity is now generating huge over supplies in the domestic market eroding profitability of the industry.
