Texprocil Urges Government To Exempt Merchant Exporters From Charging IGST

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Texprocil Urges Government To Exempt Merchant Exporters From Charging IGST

The Cotton Textiles Export Promotion Council (Texprocil) Chairman Ujwal Lahoti has urged the government to exempt merchant exporters from charging integrated goods and services tax (IGST) to make India's textiles exports cost competitive in overseas markets.

He said that merchant exporters cannot benefit from the facility of exports under bonds or Letters of Undertaking (LUT). Besides, no enabling document has been prescribed so far by the government under which goods can be cleared by manufacturers without charging IGST meant for exports by merchant exporters against a bond or LUT. In the absence of such a provision, manufacturers charge IGST on goods supplied to merchant exporters meant for exports under a bond or LUT, he said.

The earlier central excise regime had a facility under which merchant exporters who had executed B-1 bonds were provided with CT 1 certificates, he said, adding that a similar facility must be introduced at the earliest, so that merchant exporters exporting under bonds or LUT can get IGST free goods from manufacturers.

He said that the Foreign Trade Policy allows fulfilment of export obligations under various schemes through "third party exports". Such a provision of getting exports goods without payment of IGST from textiles manufacturers will lead to ease of doing business and also the seamless flow of credits, he said.

He also urged the government to exempt the textile industry from furnishing bank guarantees while executing B-1 bonds, especially for those players who hold a membership with an export promotion council. Bank guarantee increases cost unnecessarily, Lahoti said.