The textile industry has asked the government for establishing a mechanism for refund of state-level duties which amount to 6% of the export value and remain unrebated.
?The concession has been sought, given the inter-state transactions involved in the long value chain,? Confederation of Indian Textile Industry (Citi) chairman PD Patodia had said.
He added the 4% additonal customs duty collected by the Centre on imports in lieu of state-level duties charged on domestic goods is an appropriate pool for financing for refunds to exporters.
Alternatively, duty-free scrips that can be redeemed for payment of customs duty be provided towards state duties, he suggested.
Referring to the plight of the export-oriented units (EOUs) in the sector, Patodia pointed out that the relief measures announced by the government through drawback and DEPB rates are not available to them even though they are equally affected by appreciation in the domestic currency.
Citi has spelt out a three-pronged strategy for mitigating the problems: extension of optional excise duty regime for cotton textiles (cotton fibre is not subsject to any excise duty), an increase of duty drawback on furnace oil for which EOUs are eligible (this sould be proportionate to the increase in oil prices) and finally allowing EOUs in existance for a minimum period of 10 years to de-bond without payment of any duties on capital goods.
In the case of high interest rates, Patodia observed some relief has been provided to the exporters by way of subvention of interest rates on packing credit.