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Web Exclusive | October 2018

Issues related to GST & export incentives tabled during SRTEPC meet

SRTEPC delegation comprising of Narain Aggarwal, Chairman, SRTEPC, Ronak Rughani, Vice-Chairman and S Balaraju, Executive Director met Suresh Prabhu, Union Minister for Commerce & Industry and Minister of Civil Aviation on October 8, 2018 to appraise him on the GST issues being faced by the MMF segment and export promotion incentives. SRTEPC Head thanked the Union Minister for his consistent support and handholding guidance towards the MMF segment.

SRTEPC team submitted representations to the Union Minister on issues pertaining to GST, RoSL, MEIS, etc. Besides the issue on undue delay of GST refunds, Chairman, SRTEPC insisted on exclusion of import of capital goods from the ambit of GST, as it is adversely affecting investment in the textile sector and defeating the purpose of the “Make in India” initiative of the Government. For having due consideration in this matter, the Union Minister called Amitabh Dwivedi, Deputy Secretary, Department of Commerce and directed him to follow up the matter with DIPP for appropriate actions. 

Ronak Rughani, Vice-Chairman, SRTEPC, pressed on the issue of ITC Lapse mentioned by the Government through Notification No.20/2018-CTR dtd. 26-07-2018. Rughani brought the issue to the notice of the Union Minister and informed the later that the issue of lapse of unutilised credit as contained in notification no.20/2018 will be a huge setback for textile exporters as this provision is against the basic settled principle that the right validly earned cannot be extinguished. He informed that the lapsed amount is leading huge losses in the books of accounts as the same has now become cost of business for the exporters. The Minister expressed his positive consideration on the issue. 

On the RoSL issue, SRTEPC Team informed the Minister that substantial amount of State taxes and duties still exists which are neither subsumed with GST not rebated. These State taxes and duties such as stamp duty, electricity duty, tax on fuel, wheeling charges, fixed charges, cross subsidy on electricity bills, transmission charges, water cess, green tax, local body taxes, road taxes, labour cess, etc. have been embedded especially on yarns and fabrics exports which is around 6 per cent of FOB value of exports. Therefore, the Council requested that RoSL Scheme needs to be extended to yarns and fabrics segment also and 6 per cent RoSL rate to be considered for rebate on yarns and fabrics exports. 

During the Meeting, the Minister was also appraised by the SRTEPC Team on the issues of surging imports from China as well as impact of high crude oil prices on manmade fibres and filament yarns segment (being petro chemicals based). The recent US sanctions on Chinese imports of fibres, yarns and other textiles will make these items highly prone to dump in India by China. To set off this situation Chinese is considering further increase in its subsidies on the textile exports which will lead to further escalate the imports into India. In view of this recent Chinese development, the Team requested the Minister for incentivising the textile sector to increase competitiveness of the Indian textile industry globally. 

They also requested the minister to increase the MEIS reward rates to 5 per cent on all MMF textile tariff lines. Rughani informed the minister that MEIS scheme gives much needed cushion for increasing competitive edge of the MMF textiles that have been facing tough price competition from countries like China, Taiwan, Korea, Indonesia, Vietnam, etc. He also informed that Governments of the South Asian countries incentivise exports through refund of duties as high as 17-21 per cent apart from giving multi-layer subsidies. Therefore, it was requested to the Union Minister that rewards under MEIS Scheme need to be extended to all MMF textile items including fibre, yarns, fabrics and made-ups and MEIS reward rates should be increased to 5 per cent for all the MMF textile tariff lines. Rughani stated that also requested that the Scheme (MEIS) needs to be continued till a WTO compatible alternative Scheme is designed to replace.

On the GST front the SRTEPC Chairman, Aggrawal informed the Minister that it has been a real challenge for MMF textile segment, to cope up with the GST regime. Being under inverted duty structure, the MMF textile trade and industry has been receiving step-motherly treatment as compared to other fibres segments. More than 14 months passed since the new Tax regime was implemented in India, but unfortunately, there are various anomalies in the GST system that have been affecting the MMF textile segment. Therefore, Aggarwal insisted that the following major pending issues under the GST regime need to be addressed on priority basis.
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