Several products have seen their duty drawback rates significantly increase after the government published the new rates.
The drawback rate for cotton T-shirts has grown from 2.1% to 3.1%, while the rate for man-made T-shirts has increased by 0.5%. There has also been a little increase in the drawback rate for baby clothes (both blended and cotton).
There has been a major change to the drawback value cap per item. For example, the cap for infant clothing has increased from Rs. 6 to Rs. 12.5, and the cap for blended infant clothing has increased from Rs. 6 to Rs. 29.4.
Since the last revision was completed on January 28, 2020, this one has been made more than three years ago.
Recently, a Notification was published by the Department of Revenue, Ministry of Finance, Government of India, updating the Drawback schedule. This notification will take effect on October 30, 2023.
The notification also states that the blends containing cotton and man-made fiber must have a man-made fiber content that is greater than 15% but less than 85% by weight, and the blends containing wool and man-made fiber must have a man-made fiber content that is greater than 15% but less than 85% by weight, concerning the tariff items in Chapters 60, 61, 62, and 63 of the said schedule.
If a garment is described as being composed of cotton, wool, silk, or man-made fiber, it means that at least 85% of its weight is made up of that fiber.
Tirupur Exporters Association (TEA) President K.M. Subramanian stated, “We are happy with this decision as we have appealed for the revision of drawback rates and value cap upwards for knitwear garments.”
