The textile industry in the region has termed the reduction in duty drawback from 7.6 per cent to two per cent as a death knell, particularly garment sector in Tirupur and urged the Government to have re-look on the issue.

In a release, Tirupur Exporters Association President Raja M. Shanmugham said the reduction in drawback rate to the knitwear export sector is death knell to Tirupur export garment sector and has come as rude shock to them who are already facing severe competition in the global market.

“If the buyers go out of the country due to higher price it would be very difficult to bring them back, since they will stick and settle with the competing countries like Bangladesh, Sri Lanka, Cambodia and Vietnam,” he said. He also expressed apprehension that this may lead to more job losses, since 80 per cent of the garment units are in MSMEs.

“The announcement does not synchronize with the earlier announcement by the Government of boosting exports and job creation, as the old drawback rates have been retained when Cenvat credit was availed without any change and also without getting into detailed calculation of blocked tax burden on each product,” Southern India Mills’ Assocaiton Chairman P. Nataraj said in a separate statement.

Considering the big impact on textile industry, they appealed to the finance ministry to have a re-look at the rates applicable for textiles, refund all the blocked, embedded taxes, levies and accumulated input tax credit on fabric especially the processed fabric and announce a positive package.