Cut in duty drawback rates to impact engg sector: CII

Expressing concern over recent reduction in duty drawback rates for sectors like engineering, CII today said the move would erode the competitiveness of the segment in the global market.

Under the duty drawback rate scheme, the government refund duties on imported inputs for export items. "The finance ministry has reduced rates on exports across all segments. Auto two-wheelers and engineering sector have seen the sharpest cut which will further erode their competitiveness in the global market," CII said in a statement.

"In fact the exporters already reeling under the decreased export orders will be further hit by decrease in duty drawback rates for export items," CII National Committee on Exports and Imports Chairman Sanjay Budhia said. India's exports declined by 11 per cent in September to USD 23.69 billion due to sluggish demand in the European market.

"It will be a big challenge to meet the export target of USD 360 billion. This decrease in duty drawback rates will adversely affect the exporters and the industry request the government to reconsider the rates," Budhia added.

Earlier this month, the government has announced the new duty drawback rates for 2012-13.  The rates for items like leather trunks and handbags, wool yarn and fabric, gaskets, lawn tennis balls, cricket balls, felt tipped/porous tipped pens and markers have been reduced from the rates applicable in 2011-12.