Indian exporters will take up the issue of inverted duty structure mainly on apparels and electronics when exporters meet finance minister Pranab Mukherjee this month end ahead of union budget for next fiscal.
Other issues that are also likely to figure prominently are high interest rates, allocation of greater credit to exporters and concessions to infrastructure sector under the Direct Tax Code.
“Focus of this year’s pre-budget meeting will be inverted duty structure on apparels and electronics mainly from Bangladesh and Asean region, as finished goods are coming at cheaper rates from these countries while the raw material that is being sourced is expensive. This, in turn, is hampering domestic manufacturers who are losing business to Bangladseh and Asean,” Ajay Sahai, director general of FIEO told Financial Chronicle.
In September 2011, India had announced duty-free access to 46 garment products from Bangladesh including items such as pants, shirts, blouses, skirts, kids wear, cotton nightwear, jeans, swimwear and tracksuits. Cheaper imports from Asean are on the back of free trade agreement on merchandise trade between India and Asean.
On the contrary, man-made fibre (MMF) and viscose filament is imported from Bangladesh, Thailand and other neighbouring countries at 10 per cent duty. Since raw material constitutes 50-60 per cent of the total cost of the finished product, Indian apparels end up being expensive.
“Free trade agreement not withstanding, there is immense potential for value-addition on MMF, currently being imported from at least a dozen countries into India. Centre should either abolish the import duty on MMF or reduce it to 4 percent from 10 per cent,” DK Nair, secretary general of the Confederation of Indian Textile Industry said.
The global consumption of man-made fibre (MMF) is 66 per cent while in India it is only 30 per cent.
Source : mydigitalfc.com