Sops lower than pre-GST ones: Textile sector

A worker takes a nap during a power cut in front of yarn-spinning equipment inside a factory. (File photo: Reuters)
Despite the central government enhancing the Merchandise Exports from India Scheme (MEIS) and Remission of State Levies (RoSL) for the textile sector, the latter is critical.

The country’s second-largest job generator says the incentives are still less than the pre-goods and services tax (GST) era.

In a notification on Saturday evening, the Centre said the post-GST rates of RoSL were up to a maximum of 1.7 per cent for cotton garments, 1.25 per cent for manmade fibre (MMF), silk and woollen garments and 1.48 per cent for apparel of blends. And, up to a maximum of 2.2 per cent for cotton made-ups, 1.4 per cent for MMF and silk made-ups and 1.8 per cent for made-ups of blends. For sacks and bags of jute, the rate is 0.6 per cent. All these apply with effect from October 1.

Further, the directorate-general of foreign trade enhanced the rates under MEIS from two to four per cent on readymade garment (RMG) and made-ups from November 2017 to June 2018.  Allocation for the scheme is Rs 1,143 crore for 2017-18 and Rs 686 crore in 2018-19. 

Textile exports had dropped due to competition from countries having duty-free access in the European Union and other major markets. Since the transitional provision of pre-GST drawback rates and RoSL benefits were extended only up to September, export of RMG had fallen by 40 per cent in October, top the lowest level in 42 months. 

Ashok G Rajani, chairman, Apparel Export Promotion Council, says he’s disappointed at the RoSL rates, as it was “far below our recommendations and central taxes rebate was not considered at all. Trade is in a dire state”.

M Rajashanmugham, president, Tirupur Exporters Association, says there’s still a 2.7 per cent shortfall compared to incentives drawn before GST implementation.

P Nataraj, chairman, the Southern India Mills’ Association (SIMA), said they’d been expecting at least two to three per cent increase in the RoSL rates, considering the various embedded or blocked taxes, central and state. He said he hoped these would be considered while announcing the revised duty drawback rates and ensure the same level of competitiveness the industry had under the special export garment package. He urged the new duty drawback rates be announced without further delay, with effect from October 1.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel