50 textile and apparel firms go unethical! Several export promotion schemes misused

Time and again, Indian textile and apparel industry insists that Government support is must for their survival and they have been urging the latter to introduce industry-friendly schemes. But then, there are dozens of companies who misuse these schemes and hamper the Government’s revenue.

Apparel Resources has a list of 50 such companies (see the list at the bottom, shared by Minister of Commerce and Industry, Piyush Goyal, in a written reply in the Lok Sabha (Lower House)) who have, over the last 3 years, resorted to unethical practices to misuse export promotion schemes and have been caught by the Government officials.

What is noteworthy is that the list includes some well-known names too!

From spinning mills to apparel manufacturers, there are many companies across the supply chain who have been found misusing the schemes.

It is indeed more worrying when some companies have been found resorting to unethical practices again and again over the years. One such company is Liliput Kidswear Ltd. that has faced penalty 17 times from 2016-17 to 2017-18 – penalty worth around Rs. 70 lakh. If one would recall Lilliput also had many reported cases in 2013 regarding pending US $ 5 million dues to Bangladeshi garment suppliers.

Similarly, Bebas Textile has faced penalty 3 times in 2018-19 and once in 2016-17. In another surprising case, Sanjeev Garments faced penalty of Rs. 1 crore.

Also, it is imperative to note here that as far as textile hubs are concerned, maximum defaulting companies are from Ludhiana compared to any other hub.

The Minister told that such companies have misused various schemes like customs duty exemption on import of capital goods for promotion of exports, customs duty exemption on raw materials, components and consumables for manufacturing goods for exports and compensation for neutralising the disadvantages suffered on the goods and services exported.

Necessary actions have been taken against these companies which may include suspension, cancellation of the authorisation, blacklisting the defaulter from availing any export promotion scheme, the imposition of fiscal penalty, cancellation/suspension of Importer and Exporter Code number and initiating criminal proceedings.

It is pertinent to mention here that during the last three financial years (2016-17 to 2018-2019) overall, including all industries, 1,865 persons have been put under “Denied Entity List” denying further benefits under the export promotion schemes and penalties have been imposed in 1,374 cases.

During the same time frame, the Department of Revenue has identified and imposed penalties in over 400 cases.

Apparel Resources has approached most of the textile companies for their input. As and when we will receive their comment, will update you here only.

List of textile and apparel companies who misused Govt.’s schemes and faced penalties (Issued by Government of India)