Good news for Indian textile and apparel industry! Govt approves scheme to rebate state and central embedded taxes

In a big relief to the Indian apparel industry, Union Cabinet chaired by Prime Minister Narendra Modi today approved scheme to Rebate State and Central Embedded Taxes. Main component of the decision includes increase in rebate by including both state and Central levies, extension of rebate up to 31st March 2020 and change into disbursal mechanism of the same. The move will greatly benefit apparel & made-ups manufacturers and exporters.

Rebate of State and Centre Levies / Taxes will be done through IT driven Scrip System thereby preventing delay and ensuring speedy disbursal.
Garment exporters are happy with this announcement, especially with the Central Embedded Taxes as they were struggling on this front. So far, apparel and made-ups segments are supported under the Scheme for Rebate of State Levies (RoSL). However, certain State and as well as Central Taxes, continue to be present in the cost of exports.
The decision is important as apparel & made-ups sector have combined share of 55 per cent (around US $ 21 billion) in the total Indian textile export basket. It will have a direct impact on these segments thereby increasing competitiveness of India’s textile exports globally.
The proposed measures are expected to make the textile sector competitive. Rebate of all Embedded State and Central taxes/levies for apparel and made-ups segments would make exports zero-rated, thereby boosting India’s competitiveness in export markets and ensure equitable and inclusive growth of textile and apparel sector.
Indian apparel exporters had a logic that there are many levies outside GST that are embedded in the export prices, and so they demanded often for higher duty drawbacks and RoSL rates.

This was the last Cabinet meeting ahead of the 2019 Lok Sabha election. There were some other decisions also taken in the meeting which are supposed to enhance infrastructure in India. It includes approving recommendations of the Group of Ministers relating to issues of stressed Thermal Power Projects and approving the revival and development of un-served and under-served airstrips of state governments and others.

 

 

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