June 30, 2022


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textile trade: Garment exporters face potential lack of Rs 1,200 crore

Garment exporters are gazing a possible lack of Rs 1,200 crore because of the new situations imposed within the Rebate of State and Central Taxes and Levies (RoSCTL) scheme.

The scheme affords rebate in opposition to the taxes and levies already paid by exporters on the inputs. Now, this rebate has been transformed into scrips which are tradeable. Exporters can promote the scrips to importers, who in flip can use the instrument as an alternative choice to money to pay import obligation. The scrips commerce at a reduction, which has now gone as much as 20% from 3% in December, trade insiders mentioned, placing strain on the margins of garment exporters at a time when they’re going through challenges on account of rising cotton costs.

“This discounting of scrips advantages importers, who’re taking undue benefit at the price of exporters,” mentioned Vijay Jindal, a member of the Attire Export Promotion Council (AEPC) and president of the Garment Exporters & Producers Affiliation (GEMA).

Garment exports at $16 billion contribute 36% to the nation’s annual textile exports of $44 billion. In keeping with estimates, reimbursement below the RoSCTL scheme is the same as round 5% of the attire exports, or roughly Rs 6,000 crore. At a broad degree, a reduction of 20% on this might imply a direct hit of round Rs 1,200 crore for the exporters.

“The textile trade desires the federal government to restart money reimbursement as a substitute of those tradeable scrips, as these scrips are buying and selling at a 20% low cost,” Jindal mentioned. “That is leading to a considerable money switch from exporters to importers and helps the importers.”

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The textile trade employs round 45 million staff and is anticipated to be value greater than $209 billion by 2029. But when this anomaly continues, then the trade will quickly lose its international competitiveness to international locations like Bangladesh and Vietnam, the place the labour price could be very low, say trade insiders.

Regardless that the scheme was launched with the intention of constructing India’s textile trade aggressive and bolstering exports, due to the low cost out there, it’s performing in opposition to the federal government’s intention of serving to the exporters and is as a substitute benefitting importers, they mentioned. It additionally defeats the aim of the federal government’s acknowledged coverage of ‘Make in India’ for the world, they added.

“At current, demand for such scrips could be very much less as exporters are discovering it tough to search out sufficient importers who should purchase the scrips,” mentioned Harish Ahuja, an government member of the AEPC and administration committee member of the GEMA.