Call for removal of inverted duty on fiber exports

The Dollar Business Bureau Concerned over countries like China importing coir raw material from India and exporting finished products to other countries, SN Tripathi, Coir Board Chairman and Joint Secretary in the MSME Ministry has suggested removal of inverted duty structure to protect the interests of domestic coir industry. The Minister has also sought doubling of funds for the ministry (Rs 68 crore at present) and proposes to introduce a Technology Upgradation Fund (TUF) like scheme for the coir sector.  "This year our budget is only Rs 68 crore. We want it to be doubled next year so that the coir industry gets a big boost," Tripathi said. Under inverted duty structure, finished goods are taxed at lower rates than raw material.  The coir industry, which is primarily based in Kerala, employs 3.75 lakh labourers, and over 90 per cent of those are women. However, these numbers have been declining over the years owing to factors like low wages and little modernisation.  Inverted duty structure impacts the domestic industry adversely as manufacturers have to pay a higher price for raw material in terms of duty, while the finished product lands at lower duty and costs less.  Further, concessions given by India under Free Trade Agreements (FTAs) to its partner countries has also resulted in inverted duty structure that makes Indian manufactured goods (those dependent on imported raw materials) uncompetitive in domestic market.   

This article was published on February 5, 2015.