Reimbursement scheme for textiles on the anvil

The Union Government has assured the textile and clothing industry that it will identify Central and State embedded taxes and work out a reimbursement scheme soon. HKL Magu, Chairman, Apparel Export Promotion Council (AEPC), has said that representatives from apparel, made up, and textile segments met the Union Finance and Textile Ministers and officials of the two ministries.

The industry explained the issues of concern, pending GST refunds and slow disbursement of rebate of State levies (ROSL). The embedded and inverted taxes were not considered for refund and there was a delay in receiving the GST refunds, they said. Over 90 per cent of the textile and clothing industry was in the MSME sector and these delays had affected the financial capability of the units. The exporters were unable to book orders during the peak season.

The industry had seen reduction in drawback and ROSL by over 5 per cent of FOB since the pre-GST period. Further, Indian textile and clothing exporters did not have preferential access in countries markets such as the European Union which countries such as Bangladesh and Vietnam had. These had an impact on the exports.

Magu said the Finance Minister had instructed the officials to immediately identify the Central and State embedded taxes and work out a reimbursement mechanism. The Ministry would also expedite refund of GST and ROSL in a time-bound manner.

Though annual apparel exports are at $17 billion now, the industry is confident of 20 per cent growth this financial year if there a level-playing field.