India Exporters Call For Resumption Of Export Tax Rebates For Knitted Garments

The India tax bureau and the Ministry of Finance announced the reduction of the tax rebate rate of 2008 to 09 years, of which the export rebate rate of cotton knitted garments decreased from 11% to 8.8%.

This adjustment has frustrated the Tirupur Exporters Association.

At present, clothing export enterprises feel severe price pressure, mainly due to increased production costs, such as yarn price, electricity price, processing cost, pportation cost and so on. Garment export enterprises struggle for survival in the global competition market.

The main reason for the rising cost is the increase in the price of oil products and the rise in global market oil prices.

Exporters place their hopes on the government. No matter what difficulties they encounter, the government will help them overcome the crisis and help them tide over the crisis.

They put forward many reasons for restoring the export tax rebate rate.

Yarn price: the price of main raw materials and cotton yarn increased by an average of 25%. The textile mill said that the price of cotton was raised and the electricity price was raised, while the diesel power generation of self owned power plant.

Processing costs: knitting, dyeing, compaction, calendering, embroidery / printing costs, including excipients, such as polyethylene bags and packaging materials costs rose by 25 - 40% in 3 months, and ultimately increased the cost of clothing production.

The cost of dyes and chemicals, excipients and polyethylene bags rose sharply compared to three months ago.

Cost efficiency of manufacturing enterprises: the production cost of Polo shirts has increased by 28.27%.

Now the export tax rebate is reduced by 2.2%, and the cost of knitting enterprises can hardly compete in the world market.

Transportation costs: fuel prices soar.

From Tirupur to Tuticorin, railway freight increased by 800 rupees, from 5100 rupees to 5900 rupees, and from Tirupur to Chennai, the cost of shipping increased by 1900 rupees, from 5600 rupees to 7500 rupees.

The current trade status: clothing export enterprises can not raise prices, because clothing prices in 9 months to 1 years ago decided that exporters can not be based on production costs and pport costs to raise prices accordingly.

Another reason is that foreign buyers can choose other neighboring countries, such as China, Bangladesh and Pakistan, as well as Vietnam, Kampuchea and Indonesia, which are new competitive countries in India.

Exports to the US and EU markets:

Exports to the US have shown a negative growth in the past 7 months, as is the case with the European Union.

It shows that the price of India is too high and the export products are not competitive.

The exchange rate: in the past 4 months, the rupee has depreciated 7.94% against the US dollar (in May 1, 2008 the US dollar was 40.19 rupees, and the US dollar in August 29, 2008 was 43.38 Rupees). Most garment exporters did not really benefit, because they started their business in 9 months in advance according to the forecasts of economists, bank advice and various reputable financial institutions, and predicted that the rupee would rise to 36 rupees to one dollar.

For these reasons, exporters are unable to enjoy the benefits of the revaluation of the rupee.

In addition, recent exchange rate turbulence is abnormal and unpredictable.

Rupee export credit interest rate: the Reserve Bank of India announced that the interest rate subsidy to stop 4% of export credit came into effect in September 30, 2008.

The Tirupur Exporters Association has asked the Ministry of finance to seriously consider many factors that are not conducive to the export of knitted garment enterprises, and to restore the export rebate rate of cotton garments from 8.8% to 11%.