Recently the commerce ministry redefines the waste rate of yarn and fabric used in knit garments. The ministry also informed that this new rate will come into effect immediately. This will allow readymade garment (RMG) exporters to import more yarn and fabrics duty-free than the present level for the same amount of export.
As per the decision, from now the maximum wastage rates will be 27% for basic knit items, 30% for specialized items and 8% for sweaters and socks.
For basic knit items like t-shirts, polo shirts, trousers, shorts, skirts, pajamas – waste rate will be 27%, for special items like rompers, tank tops, dresses, gowns, hoodies, lingerie products waste rate will be highest 30%.
While sweater and socks items sweaters, jumpers, pullovers, cardigans, vests, socks, gloves and like items products waste rate will be highest 8%.
Earlier relevant stakeholders have been voicing their objection for long to the commerce ministry to reset the waste rate.
According to various stakeholders, if the production wastage rate of an export-oriented RMG manufacturer – who enjoys a duty-free facility for raw material imports – is less than the prescribed rate, they sell the excess raw materials in the open market. This eventually damages the business of local companies that produce raw materials.
On the other hand, if the actual wastage rate is higher than the rate set by the government, the authorities impose duty, supplementary duty and VAT on the extra wastages.
