As compared to the last year in October, apparel exports decline by 40 per cent and the Apparel Export Promotion Council (AEPC) has shown concern and started engaging with different policymakers to resolve the issue that is hampering the apparel industry after the new tax regime system implementation. They have already made several presentations to the textiles ministry, drawback committee, NITI Aayog and a parliamentary standing committee after anticipating the decline.
The sharp reductions in the effective rates of drawback and Rebate of State Levies (RoSL) has led to the decline in the exports of apparel and it has not only reduced the total reimbursements of duties for the apparel sector but has directly affected the export prospects of the same, an AEPC chairman, Ashok Rajani met to convey it to Arvind Subramanian, chief economic advisor (CEA) on November 16.
Arvind Subramanian was informed also about the recommendation of the drawback committee for a composite rate for apparel sector without goods and services tax (GST) credits as an option and requested him for an early expedition to benefit small scale exporters as fast as possible.
In its presentation, The AEPC delegation to a parliamentary standing committee urged for the extension of exemption of international GST on import under Export Promotion Capital Goods (EPCG) or Advance Authorization from March 31, 2018 to December 2018 to provide a longer window for investment decisions.
Ashok said while hoping for quick solution and said, “The important point is the principle of reimbursement of domestic non-GST and GST central taxes in addition to customs through the drawback mechanism. This requires an amendment in the drawback rules to provide for reimbursement of GST duties. We therefore urged Dr. Subramanian that pending these legislative changes, the total duty reimbursements to the apparel sector be retained at pre-GST stage of 7.5 percent drawback without input tax credits, plus 3.5 per cent of RoSL. These pre-existing levels of reimbursement through the drawback and the RoSL routes may be maintained up to 31 March, 2018 to provide immediate relief to the reeling apparel sector.”
– Apparel and Textile News, Apparel Talk, Indian Apparel
