Garment exporters want duty credit scrip of 5% & separate chapter for exports in banking sector

Shri Anand Sharma, the Union Minister for Commerce & Industry Chaired the Board of Trade meeting held on 27th August 2013 to listen and gather the concerns of the Industry captains and devise measure to boost exports thereof.

Chairman AEPC in his statement released to the press stated that : “The garment industry could achieve US $ 12.92 bn exports in 2012-13 & modest 13% growth in April – July, 2013 due to Policy Support given by the Government. Support like duty credit scrip at the rate of 5%, increasing the support under MAI, implementing the gold card scheme, separate chapter for getting export credit for the banking sector at fixed rate of 7.4% and Market Linked Focus Product scheme may be increased to from 2% to 3% and newer countries to be added and currency swap to explore the possibility of using local currency for trade with major trading partners. As well as, changes in service tax, income tax and labour laws as per the industry need are the thrust areas which have potential of boosting the apparel trade, if met.”

Shri HKL Magu Senior Vice Chairman, Apparel Export Promotion Council (AEPC)
Shri HKL Magu
Senior Vice Chairman, Apparel Export Promotion Council (AEPC)

Shri H K L Magu, Senior Vice Chairman, Apparel Export Promotion Council (AEPC) made the detailed submission and highlighted the issues and concerns of the apparel sector. Shri Magu at the onset thanked Minister for enhancing the interest subvention from 2% to 3% in Readymade Garment Sector. He then gave the details of the apparel export scenario and highlighted the benefits that are announced by Government for the benefits of apparel exporters.

On behalf of the garment Industry Shri Magu laid before Shri Sharma the demands and concerns of apparel exporters during the BOT meeting.

  • Enlargement of the garment export basket by manufacturing garments (Knitted and woven) from fabrics which are not widely available in India – Issuance of duty credit scrip (offsetting custom duties) on import of specialty fabrics at the rate of 5% for the export performance in the year 2012-13 and in the entire 12th five year plan.
  • Higher and assured three years direct financing to Apparel Export Promotion Council under market access scheme (Under chapter 3 of the foreign trade policy 2009-14 (Promotional measures in department of commerce).
  • Higher and assured three years direct financing to Apparel Export Promotion Council under market access scheme (Under chapter 3 of the foreign trade policy 2009-14 (Promotional Measures in dept. of commerce).
  • Gold Card Scheme : Dependency on using captive DG sets, by the garment exporters is increasing day by day due to the shortage of electrical power provided by the electricity boards, which increase the cost of production substantially. The diesel for using in the Gen sets should be provided to the garment exporters at international prices.

Issues which need recommendations to Ministry of Finance

Separate chapter for getting export credit (Rupee Pre-shipment/Post Shipment) at fixed 7.5%, as done in the past.

Service Tax :

  1. Waiving of Service Tax on taxable service to in sub clause (zzze) of clause (105) of Section 65 of Finance Act on services to specified associations under (zzze) of Finance Act) for the period viz. 16.06.2005 to 06.07.2009.
  2. Expansion of services under Section 66D (l) (ii) & (iii) of the Finance Act 1994 – negative list of service tax and service tax on vocational education/training courses.

It is requested that Govt. may notify ATDC and AEPC respectively as VEC and Skill Assessment Body, recognized by the law, since they are operating out of grants provided under Modular Employable Skill Course and funds are released by the MoT under budgetary heads mentioned above.

Income Tax :

Section 35 of IT Act, 1961 (Amendment Sought) :

The benefit of this section should be allowed by allowing readymade garment sample making to the extent of 5% of the turnover of that assessee in the same assessment year.

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