Indian apparel exporters are looking forward to a hike in duty drawback of about four to 4.5 per cent to mitigate the embedded taxes paid by exporters.
This is expected to translate to around a Rs 5,000 crore boost for the sector.

Indian exporters pay embedded taxes in products like seeds, besides electricity duty and taxes on diesel, but are unable to recover them, which is weakening their competitiveness.

In the first nine months of the current fiscal, the sector registered a decline in exports compared to the previous fiscal. Exports of apparel have declined after the implementation of GST due to lowering of the duty drawback rate from 11 per cent to 3.7 per cent and non-disbursement of the drawbacks. Fiscal 2018-19 is likely to be flat for apparel exports.

The old duty drawback rate which was very attractive, that came to an end in September 2017. Because of this attractive scheme, Indian exporters advanced their delivery schedules to avail of the duty drawback scheme. Consequently, textile and apparel exports skyrocketed in September 2017. Exports one year later, in September 2018, declined sharply.

India’s share in world trade in textile and clothing is estimated to be 4.95 per cent. With these exports, India is ranked second among suppliers in the world.