The finance ministry has agreed to take a relook at the new duty drawback regime, which has prescribed rates on the basis of weight rather than the value of the consignment.

"The ministry has assured us to relook at the criteria of giving drawback benefit on the basis of weight of exported consignment rather than value, which was the practice earlier," Apparel Export Promotion Council (AEPC) chairman A Sakthivel said.

A delegation of the council held a series of meetings with finance ministry officials last week to apprise them of their opposition to the new drawback regime.

• Run-up to the Budget 2005-06

"We put forward the argument that pegging drawback benefits to the weight of the consignment does not make sense as exporters are paying taxes on the value of their inputs and not weight," he said.

"They have agreed to consider our argument and get back to us," Sakthivel said.

According to officials of AEPC, the new drawback regime would result in loss of business worth Rs 300 crore annually.

"With the drop in drawback benefits, the margins of exporters, which have already come down after dismantling of quota system in the world textile trade, will be squeezed further. The pressure on margins will lead to cancellation of at least 5% of the orders as no exporter would like to sell at a loss," they said.