24 August 2022, Mumbai
Garment exporters of Rajasthan are seeking an amendment in the structure of the Rebate of State and Central Taxes and Levies (RoSCTL) owing to the loss of 15 percent in their profit margins.
Exporters also fear a decline in export competitiveness, like their other counterparts across the country. The garment/apparel manufacturing sector in the state is worth Rs 2,500 crore.
Vimal Shah, President of Garment Exporters Association of Rajasthan (GEAR) says, the textile industry wants the government to restart cash reimbursement instead of these tradable scrips, as these scrips are trading at a 20 percent discount.
These scripts are sold by exporters to importers, who in turn can pay their import duty with these purchased scrips as an alternative to cash import duty payments. This is resulting in substantial cash transfer from exporters to importers, said Shah in a statement.
Vijay Jindal, Member, Export Promotion, AEPC & President, GEMA adds, that the RoSCTL scheme provides rebates against the taxes, levies, etc. already paid by the exporters on the inputs. This rebate has been converted into scrips that are tradable i.e. exporters can sell scrips to the importers and importers, in turn, can pay import duty with these purchased scrips as an alternative to cash import duty payments.
RoSCTL was launched with the intention to make India’s textile industry competitive and strengthen its exports. However, certain changes were made to the scheme in September 2021 and its current form is eroding the export margins of the domestic textile industry.
Based on estimated calculations, of the total $16 billion in apparel exports, around 5 percent is reimbursement, which is roughly Rs 6,000 crore.
At a broad level, given a discount of 20-25 percent on this, there is a direct hit of around Rs 1,500 crore on the feeble margins of companies operating in the apparel sector.
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