Govt revises drawback schedule for apparel sector; exporters want more FTAs

Employees work inside a garment factory in Mumbai
Ministry of Finance has issued a notification revising drawback schedule for apparel sector, which will come into effect from February.  

While for the cotton-based products it would be around 0.2 per cent increase, for man-made fiber and blended garments it would be around 0.4-0.6 per cent. While welcoming the announcement, exporters said that government should focus on signing FTA and clearing the ROSTL, which is affecting the working capital of the exporters.

The notification will come into effect from February 4, 2020. For cotton t-shirt after revision the drawback rate would be 2.1 per cent as against 1.9 per cent, blended 3.5 per cent vs 2.9 per cent and man-made it will be three per cent as against 2.5 per cent.  
Exporters said, hike is marginal and sceptical of whether it will enhance the exports, which is dropping.

In 2018-19 (April -December) Ready Made Garment (RMG) export was $11.363 billion and in 2019-2020 it increased to $11.457 billion.

Exporters not only want higher rate, they also want free trade agreements (FTAs) and they have decided to make representation with Central Government, says Tirupur Exporters Association (TEA), which represent major section of exporters from Tirupur, which does exports worth Rs 24,000 crore.

A leading exporter added, “whatever the duties and taxes including embedded taxes paid are given back in the form of GST, ROSCTL and Drawback. Government won't give more than this. Only thing they can do is for entering into FTA with EU, UK, Australia and Canada."

Another concern is that the government has not cleared the pending claims. For example to Tirupur units alone around Rs 1,400 crore is pending and early this week only, Government issued procedure for claiming RoSCTL benefits.

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