Textile industry upset due to exemption in tax and levy, betting upside for exporters, 30 lakh jobs may be affected

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Mumbai. The Central Government has extended it till 2024 by making changes in the Exemption from State and Central Taxes and Levies (ROSCTL) scheme implemented in 2019. Although this scheme was brought to make the domestic textile industry competitive and promote it on a global scale, but Indian textile exporters say that now the scheme has become a noose for them.

Apparel Export Promotion Council member and president of Garment Export Manufacturing Association Vijay Jindal said that the change in the scheme has created many difficulties in front of garment exporters. This can affect the global competitiveness of the country’s textile industry and the employment of about 3 million people. India currently exports apparel and clothing worth about $16 billion. But, foreign importers are getting more benefit of changes in RoSCTL scheme than exporters.

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where is the error happening
Vijay Jindal said, the scheme provides exemption from taxes, levies etc. already paid on inputs by exporters, but this exemption was converted into scrips which are tradable. Exporters can sell this scrip to their importers. Importers can in turn pay duty from these purchased scrips as an alternative to cash import duty payment. They used to be sold at a discount earlier as well, but now this discount has increased from 3 to 20 percent.

Importers are taking unfair advantage
With this discount on scrips, the importers are taking undue advantage at the expense of the exporters. Of the total $16 billion in textile exports, 5 per cent reimbursement comes out to about Rs 6,000 crore. Broadly speaking, there is a discount of 20 per cent on this, which is directly impacting the poor margins of the apparel sector by about Rs 1,500 crore. Jindal said the industry may lose its competitive edge if the government does not change this structure immediately.

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Business will go to other countries
People associated with the textile industry say that due to the lack of government help, once again the demand may shift to other countries with low cost. GEMA member Harish Ahuja said that as the demand for scrips is very less right now, exporters are finding it difficult to find such importers who can buy the scrips procured under the RoSCTL scheme. This means that the importers are offering to buy scrips only at huge discounts of up to 20 per cent, which is a direct loss to the domestic exporters.

Tags: job loss, Manufacturing and exports, Textile Business

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