The government has came out with modified duty drawback rates for exporters, evoking sharp reaction from the apparel industry which will witness reduction in tax refunds. The new all industry rates of duty drawback, the refund of duties on imported inputs for export items, will come into effect from 1 October. The new refund rates for garments will come down to 2% as compared to the 7.7% drawback available till now.
The drawback was one of the key policy support measures towards lifting industry’s cost competitiveness in the wake of above slew of factors adversely affecting the sector.
This low rate is unexpected as this body blow is coming at a time when the industry is facing continuous decline in exports due to global conditions, rupee over-valuation and uncertainties post the GST regime.
With this steep decline in the drawback support, over 7,000 small and medium enterprises in the apparel exports will be crippled and doomed in uncertainties.