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Textile exporters unhappy with MEIS enhancement as incentives remain low

DGFT has enhanced the rates under the MEIS from 2% to 4% on RMG and made-ups from November 2017 to June 2018

T E Narasimahan  |  Chennai 

textile

Despite government's decision to promote (MEIS) and (RoSL) for textile sector, textile exporters said they continue to witness a shortfall of 2.7 per cent in incentives compared to pre-GST era.

In a notification on Saturday late evening, Centre said post-GST rates of rose to maximum of 1.70 per cent for cotton garments, 1.25 per cent for MMF yarn, silk and woolen garments and 1.48% for apparel of blends.

"Rates are upto a maximum of 2.20 per cent for cotton made-ups, 1.40 per cent for MMF yarn and silk made-ups and 1.80% for made-ups of blends. For sacks and bags made of jute, the rate is 0.60%. The rate for garments under AA-AIR combination is 0.66 per cent," the notification said.

These rates shall be effective from October 1, 2017. 

Further, DGFT has enhanced the rates under the from 2% to 4% on RMG and made-ups from November 2017 to June 2018. For MEIS, Rs 1,143.15 crore was allocated for 2017-18 and Rs 685.89 crore in 2018-19.

This is to boost exports and employment generation in the labour intensive textiles and apparel sector, government said.

Exports dropped due to the acute competition from countries that enjoy duty free access in EU and other markets.
 
Since the transitional provision of pre-GST drawback rates and benefits were extended only up to September, RMG exports reduced by  40 per cent during October 2017, lowest in the past 42 months.

Ashok G Rajani, chairman, Apparel Export Promotion Council said: "Disappointed with rate as it is far below our recommendations and central taxes rebate has not been considered at all. Trade is in a dire state".

M Rajashanmugham, president of Tirupur Exporters Association said the industry is witnessing a shortfall of 2.7 per cent in incentives compared to the pre-GST era.

P Nataraj, chairman of the Southern India Mills' Association (SIMA), said that enhancing benefit has given some relief to the industry. "The industry was expecting at least 2-3% increase in the rates considering the various embedded / blocked taxes of Central & State levies," he added.

He hoped the government would consider the remaining embedded taxes while announcing revised duty drawback rates to ensure the same level of competitiveness that the industry had when the special export garment package was in force.

"The drawback and rates notified by Centre are only interim relief as these benefits have not considered various embedded taxes and also inverted duty on fabric stage," Nataraj said. 

Nataraj also urged Centre to announce the new rates of Duty Drawback without any further delay with effect from October 1, so that the financial stress caused to the exporters could be minimised during this critical juncture.

First Published: Sun, November 26 2017. 16:35 IST
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