India has new duty drawback rates on garment exports from October 1, 2017. Duty drawback can be understood as the refund of the duty that was paid for the imported raw material used in the production of the exported products to the exporter.

Sustained export growth is essential to maintain and accelerate GDP growth, increase employment and reduce poverty. To encourage exports, duty drawbacks are offered to exporters, which will make their products more competitive in overseas markets.

For goods that have been imported in the country, on payment of duty, and then are being exported within a specified time period, the customs duty paid for the product import can be claimed as the duty drawback with certain cuts. The duty drawback scheme provides a rebate of the duty that is chargeable on the imported or excisable goods used in manufacturing of the exported product.

However, Indian garment exporters are already facing severe competition globally from countries like Bangladesh, Sri Lanka, Cambodia, and Vietnam. This rate cut is going to further elevate the costs of Indian garments, which will push Indian exports further back. Since 80 per cent of garment units in country belong to the small and medium category, this rate cut is expected to lead to huge job losses.