The Confederation of Indian Textile Industry (CITI) has made an earnest appeal to the government to extend the current benefits under available to readymade garments and madeups under Rebate of State and Central Taxes and Levies (RoSCTL) scheme to the entire textile value chain, as it will boost export competitiveness and generate more jobs.
The Indian textile and apparel industrytoday suffers from various infirmities and thus lacks export competitiveness in the international markets, thinks CITI chairman, Sanjay K Jain.
Jain pointed out that there is a downfall in India’s position in global textile and clothing exports in a press release. India, which was the world’s second largest exporter of textile and clothing products in 2014-17 after China, fell to fifth position in 2018 as Germany, Bangladesh and Vietnam stepped in. Further, India is also witnessing a substantial increase in textile and clothing imports during the past five years.
The space vacated by China in textile and clothing products has been largely consumed by Bangladesh, Vietnam, Pakistan and others least developed countries (LDCs). India, on the other hand, has not been able to capture the space vacated by China due to its competitive disadvantages and trade barriers in the international market, Jain said.
The obvious reasons for lacking export competitiveness in the international markets are the high costs of raw materials and embedded state and Central taxes which are not refunded to the exporters at any stage, among others making India’s intermediate and final products costlier. Moreover, the tax calculation shows that cotton yarn and fabrics attract 6.9 per cent and 8.2 per cent taxes of FOB, respectively and this is where Indian products lack export competitiveness to the competitors – most of them LDCs except China – who have the advantage of differential duties in export markets like the US, EU, China and India.
A comparison of export performance of readymade garments and cotton yarn for April to July 2019 and the previous year shows that there is a 4.3 per cent increase in the exports of garments while the exports of cotton yarn declined significantly during the same period. The change in trends in the exports of garments and cotton yarn is clearly due to the RoSCTL announced in March 2019 for apparel and made-ups. RoSCTL scheme was introduced to provide reimbursement of Central and state taxes to make sure those taxes are not exported along with the products. However, fibres, yarn and fabrics have been kept out of the same.
