The Government has increased the Merchandise Export from India Scheme (MEIS) from 2 per cent to 4 per cent for all garments and made-ups and also increased the upper limit of Remission of State Levies (RoSL) for the exports of cotton garments from 1.22 to 1.7 per cent and cotton made-ups from 1.55 per cent to 2.20 per cent. In respect of MEIS, the Government has allocated Rs 1,143.15 crore for the year 2017-18 with effect from November 1 and Rs 685.89 crore for up to June 30 during 2018-19 to encourage labour employment generation. Indian textile exports were under down trend due to industrial unrest in certain textile clusters and also the acute competition from countries like Vietnam, Bangladesh, Pakistan, etc., that enjoy duty free access in EU and other markets.
The government announced a special export package of Rs 6,006 crore during 2016 for garments to increase exports by $30 billion, attract investments worth Rs 74,000 crore and create one core new jobs in three years and extended enhanced duty draw back rates, remission of state levies, additional benefits under TUF scheme, PF contribution, flexible labour laws, etc. Later the benefits were also extended to made-up exports. However, after the implementation of GST, the duty drawback rates and RoSL benefits were drastically reduced.
Since the transitional provision of pre-GST drawback rates and RoSL benefits were extended only up to September 30, 2017, the garment exports reduced by 40 per cent during October 2017 when compared to the same month in the previous year. The garment export value of $0.829 billion recorded for the month of October is the lowest in the past 42 months. In the absence of competitive duty drawback rates, RoSL and other export benefits, the entire textiles and clothing exports are at the cross-roads and exporters are not in a position to sign any long-term contract and thus missing market opportunities. Under this scenario, the industry has been pleading the Government to expedite the announcement of appropriate duty drawback rates, RoSL rates, MEIS and other benefits so that the industry could have the same level of export benefits announced under the special garment export package. Now, the government has increased the MEIS benefit by 2 per cent and RoSL benefit by around 0.65 per cent.
P Nataraj, Chairman, The Southern India Mills’ Association (SIMA) has thanked the Union Minister for Textiles and Union Minister for Commerce and Industry for enhancing the MEIS benefit from 2 per cent to 4 per cent and also the RoSL benefits marginally to the tune of 0.65 per cent. He has stated that this has given some relief to the industry.
SIMA Chairman has said that the industry was expecting at least 2 per cent to 3 per cent increase in the RoSL rates considering the various embedded/blocked taxes of Central and State levies. He has hoped that the Government would certainly consider the remaining embedded taxes while announcing the revised duty drawback rates and ensure the same level of competitiveness that the industry had under special export garment package to enable the exporters to retain the existing customers and also remain competitive in the global market.