AEPC said the refund rates for garments will come down to 2 pc as compared to the 7.7 pc drawback available till now.
New Delhi: The revenue department on Friday came out with modified duty drawback rates for exporters with industry body FIEO demanding that the government should also offset other embedded taxes on products.
The department has notified 'All Industry Rates' of duty drawback, the refund of duties on imported inputs for export items, on a host of items, including toys, furniture, musical instruments, aircraft and vehicles, effective October 1.
Reacting to the drawback rates, FIEO president Ganesh Kumar Gupta said the new rates basically factor in the basic customs duty on the inputs used in export production.
"However, a lot of embedded taxes like taxes on power and electricity, taxes on petroleum and diesel products, embedded taxes on products which are exempt also add to the burden of the exporters," he said adding the government should look into offsetting these taxes suitably.
As per the new schedule, Apparel Export Promotion Council (AEPC) said the refund rates for garments will come down to 2 per cent as compared to the 7.7 per cent drawback available till now.
"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," the garments exporters' body said.
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, AEPC said.
FIEO President further said that merchant exporters are exporting goods procured from EOUs and SEZs while paying the basic customs duty on the inputs used in such products and therefore the drawback rates should be made available to them.
India's exports recorded a double digit growth of 10.29 per cent after a gap of three months to USD 23.81 billion in August, mainly on account of rise in shipments of chemicals, petroleum and engineering products.
Imports too rose by 21.02 per cent to USD 35.46 billion in August from USD 29.3 billion in the year-ago month.