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Garment exporters seek Govt support, tax holidays .


Date: 03-06-2009
Subject: Garment exporters seek Govt support, tax holidays
Coimbatore, June 2 As the knitwear hub grapples with a slowdown in demand from the export market, the stakeholders reiterate that they would be able to regain their place if the Government extends support to the employment-intensive garment sector.

Knitwear exporters from Tirupur had set a target of Rs 25,000 crore for 2012 when exports had crossed the Rs 11,000-crore mark in 2006-07. However, the growth progress took a hit when the rupee appreciated against the dollar in 2007-08. The global meltdown in 2008-09 further aggravated the situation.

According to Mr A. Sakthivel, President, Tirupur Exporters’ Association (TEA), “Exports started to clock negatively for the first time in the history of Tirupur only over the past two years, and were struggling to sustain in the competitive global market. Immediate Government intervention and support would help put the sector back on its rails.”

He met the Union Minister of Textiles, Mr Dayanidhi Maran, in Delhi on Monday to apprise him of issues confronting the garment export sector, with an appeal to consider and resolve them to put the sector back on growth trajectory.

Direct tax issues

During the discussion, he pointed out that the garment exporters were operating on wafer-thin margins and should, therefore, be given a five-year tax holiday. Among other direct tax issues, Mr Sakthivel stressed on the need for enhancement of depreciation rate from 15 per cent to 200 per cent towards investment in plant and machinery (used by the garment exporters and ancillary feeder units) for a period of five years to boost capital investment and exemption from payment of fringe benefit tax.

On issues pertaining to indirect taxes, the association has sought complete exemption from payment of service tax, zero duty for import of man-made fibres and also that import of machinery be made duty-free, and that a 5 per cent increase be made in the duty drawback rate to cotton knitwear garment exporters, among others.

Further demands

Mr Sakthivel has also put forth a couple of long-pending industry demands such as fixing the interest rate at 7 per cent for packing credit, a two-year moratorium for repayment of term loan and interest thereon, interest reimbursement fund under Technology Upgradation Fund (TUF) scheme, extension of TUF interest subsidy to special machinery and re-inclusion of wind turbine generator under TUF scheme.

The association has appealed to the Minister to extend the two per cent duty credit scrip on the f.o.b. value of exports for a further period of three years, introduce Gold Card scheme, liberalise labour reforms and extend NREGS to the apparel export sector.

Source : Business Line

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