Job working units can claim duty benefits under EPCG scheme
25/09/2016
COIMBATORE: The union commerce ministry's decision to allow job working units to claim duty benefits for fulfilling export obligation under the EPCG (export promotion capital goods) scheme has brought cheer to garment exporters in Tirupur.
"It is hereby clarified that in the context of common service providers under the EPCG scheme dealt with in Para 5.02 of the FTP (foreign trade policy) the definition of service provider includes job workers," said Kumar Rahul, deputy director general of foreign trade.
"This is a great relief for job working units in Tirupur. No licences were issued under the EPCG scheme in the last one year for job working units due to the interpretation that the licence holder has to fulfill obligation only through their own exports," said Raja M Shanmugham, state council member, CII.
Job working units were claiming exemption irrespective of direct linkage with exporters earlier, he said. But following complaints of misuse the DGFT stopped issuing licences to job working units. Job working units are the backbone for garment exports in the knitwear town. But they were claiming duty benefits under the EPCG scheme through exporters as they do not engage in direct export of garments.
"Only about 30 garment exporting units are having integrated facilities and others are depending on job working units only for their manufacturing activities," said A Sakthivel, president, Tirupur Exporters' Association (TEA). More than 250 job working units do knitting, dyeing, compacting, printing, embroidering and labeling work in Tirupur.
Those importing machinery under the EPCG scheme can claim total exemption for import duty. But they have to export garments to the tune of six times the duty exemption claimed over six years. For instance, if an exporter claims exemption of Rs. 30 lakh the person has to export garments worth Rs. 1.8 crore over six years.
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