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What’s Bringing Cheers To Indian Apparel Industry

When the news about country’s Union Cabinet finally approving the Scheme to Rebate State and Central Embedded Taxes to support the textile sector came industry finally had a reason to rejoice. The scheme will enable the Government to take various measures for making exports of apparel and made-ups zero rated in order to help the exporters in terms of their competitiveness.

Textiles Secretary, Raghvendra Singh shared that the decision was needed as incentives for apparel and made-ups under the Merchandise Exports from India Scheme (MEIS) were not WTO compatible anymore beyond 31st December, 2018. Apparel and made-ups segments are already supported under the Scheme for Rebate of State Levies (RoSL). Under RoSL, the Centre gives garment exporters refunds against all the levies they shell out at the state level.

Singh further said rates under the Remission of State Levies (RoSL) have been revised upwards for garments and made-ups, and centrally embedded levies outside the extent of GST have also been added to the scheme, which will offset incentives not available under MEIS for apparel and made-ups at present.

However, certain State as well as Central Taxes continued to be present in the cost of exports which impacted the exporters in the country. The rebate will be for all the State and Central Taxes for apparel and made-ups. Markedly, both make out a 56 percent share in the country’s textile export basket.

Reportedly, the revenue foregone estimate due to the decision has been pegged at Rs 6,300 annually. The current RoSL provided to textiles exporters is to offset indirect taxes levied by states such as stamp duty, petroleum tax, electricity duty and mandi tax that were embedded in exports. The aim is to make the textile sector in India even more competitive at global level. Rebate of Embedded State and Central Taxes would certainly make exports zero-rated. This will directly thereby lift India’s competitiveness in textile export markets.

Under RoSL, in apparel, previously there was a maximum rate of 1.7 per cent which has been revised to a maximum of 3.6 per cent. The rate of central levies on apparel was a maximum of 2.45 per cent which means effectively the rate on apparel has gone up from 1.7 per cent to 6.05 per cent.

For made-ups, previously the maximum RoSL rate was 2.2 per cent which has been revised to 5 per cent, plus central levies with a maximum rate of 3.2 per cent, taking the overall rate from 2.2 per cent to 8.2 per cent.

The exporters are taking a sigh of relief as this scheme will help in the matter of pricing that they were struggling with in competition to the other countries, especially Bangladesh. With the renewed rebates they are hopeful to be able to quote better competitive prices and improving the overall export scenario. The approval of the Government scheme is expected to allow the Centre to take various measures for making exports of apparel and made-ups zero-rated. Apparel and made-ups segments are already supported under the Scheme for Rebate of State Levies (RoSL). Under RoSL, the Centre gives garment exporters refunds against all the levies they shell out at the state level. However, certain State as well as Central Taxes continued to be present in the cost of exports which impacted the exporters in the country.

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