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G. Gurumurthy

COIMBATORE, May 17

THE Tirupur garment exporters have asked the Textile Ministry and the Apparel Export Promotion Council (AEPC) to remove certain procedural hurdles they are facing in getting validation of export quota under FCFS (first-come-first-served) category.

At their recent meeting with Mr Atul Chaturvedi, Joint Secretary (Exports), Ministry of Textiles, and Mr Sudhir Bhargava, Director-General of AEPC, the Tirupur knitwear exporters pointed out that the stipulation from the council that the garment shippers should submit purchase orders from their importers had thrown a spanner in getting the FCFS quota release.

Similarly, the knitwear exporters drew the attention of the Ministry and the council to the holding up of quota endorsement for the shippers by the council citing the f.o.b value discrepancy between the original FCFS quota allotment and the actual shipment endorsement.

The knitwear exporters pointed out that while the quota policy did not allow endorsement for decrease in free on board (f.o.b) value (post-quota allotment), there were instances where importers insisted on some value addition in the garments booked for imports and, hence, exporters had to apply for endorsement of the shipment at higher value. And, AEPC used to grant endorsements for such shipments up to the allotment year 2000. But of late, the council had started restricting such shipments by way of stipulating the maximum price variation of 10 per cent (on the f.o.b value) and seeking quantity reduction and pro rata debit of earnest money deposit (EMD). Exporters declaring increased f.o.b value after the FCFS quota allotment is obtained is linked to the tendency to showing low export price to save EMD. But exporters say it need not be the case always. Also the Government has now reduced the EMD rates. In fact, the increase in f.o.b. value on account of value-addition to the products should contribute to increase in foreign exchange earnings and hence, the Government should allow endorsement on increased f.o.b value by removing the `needless' stipulations, exporters argue.

As for the rejection of FCFS quota applications on the ground that the garment shippers have not submitted the purchase orders from the importers, the Government itself till sometime ago did not consider the purchase orders submission a must as it found merit in traders' suggestions that even a pro forma invoice could be taken as purchase orders.

In any case, all applications are accompanied by letter of credits (LCs) that cover the total value of shipments. The issue of unit value could have no meaning once the quantity (quota) was allotted to the exporter who has to realise that. In the case of garment shipment, the purchase orders are issued by the buying agents who often suggest changes in the garment pattern (post-quota allotment) or seek valu-addition, which pushes up the f.o.b value of shipment. This may not tally with the purchase order number in the LCs. Rejection of all quota applications citing this will put off genuine exporters who offer valid LCs and, hence, this insistence on submission of purchase orders should be done away with, the Tirupur exporters say.

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