Garment Exporters Cry “Too Little Too Late From Government”

Trade & Policy

Garment Exporters Cry “Too Little Too Late From Government”

Doubling the export incentives for apparel goods under the Merchandise Exports from India Scheme (MEIS) and improvement in the Remission of State Levies (RoSL) is yet to bring cheer on the face of the textile businessmen as the sector continues to remain in a critical state.

Textile honchos who at the onset welcomed these moves opined that the incentives that have been granted by the government don’t compare favorably with the figures that existed in the Pre-GST regime era.

It may be recalled that recently, the Center issued guidelines that the GST rates applicable for RoSL will stand at a maximum of 1.7 percent for cotton garments and 1.25 percent for manmade fibers besides silk and woolen garments. For blended apparels the figure stood at a maximum of 1.48 percent. The corresponding figure for cotton made-ups were 2.2 percent, MMF and silk made-ups were at 1.4 percent and made-ups of blends were at 1.8 percent. The rates that the government provided for facilitation of exports are applicable with retrospective effect from October 1, 2017.

The exporter’s incentive had been earlier announced by the Director-General of Foreign trade hiking the rates under MEIS from 2 percent to 4 percent for readymade garments. This notification will be applicable from November 2017 to June 2018.

Against this backdrop, exporters opined that they faced heavy competition from countries that had ready access to duty-free trade in the European Union besides other big markets. Prior to this, the pre-GST rates were extended to the textile sector till September. Consequently, in the month of October, the textile industry witnessed a quantum drop in exports. The drop was approximately 40 percent.

Spokesmen form trade bodies unanimously concurred that the current RoSL rates were a great disappointment. “The government move on RoSL falls too short of our expectations and has failed to consider our recommendations. To top it all the government failed to consider rebate on central taxes. India’s textile export basket is in a very critical state,” they said.

Exporters from the south cited figures and said there was a shortfall of 2.7 percent as compared to the benefits accruing in the pre-GST regime.