Textiles industry urges govt to continue rebate on state levies post GST

Industry fears scheme will be withdrawn prematurely, with GST subsuming all other taxes and benefits

The textile industry has urged the government to continue with the Rebate of State Levies (ROSL) scheme under the Goods and Services Tax (GST) for the benefit of made-up exports.

The ROSL scheme was introduced in March 2017 initially for three years. But, the industry fears that the scheme will be withdrawn prematurely, with GST subsuming all other taxes and benefits. Under ROSL, exporters of made ups get incentives of 3.9 per cent of the value of exported goods.

The ROSL benefit not only ensured Indian made ups were competitive in the world markets but also encouraged Indian players to expand capacity to meet overseas demand.

"When the scheme was introduced, many small, medium and large companies started working on capacity expansion. A number of companies are currently in various stages of capacity expansion despite the fact that the scheme is just three months old," said Ujwal Lahoti, Chairman of The Cotton Textiles Export Promotion Council (Texprocil).

The objective of the scheme was to provide rebate on state levies consisting of state value added tax (VAT) and central sales tax (CST) on inputs including packaging, fuel, duty on electricity generation and duties and charges on purchase of grid power, as accumulated through the stages of production from yarn to finished made ups.

Many leading companies manufacturing "made ups" are reportedly drawing up plans for investments in this sector after the scheme has been announced. The ROSL scheme will certainly lead to an increase in exports of made ups articles which in turn will create more employment.

"Any increase in the exports of made ups will create additional employment in the entire value chain such as spinning and weaving besides the made ups sector especially in the rural areas and for women," said Lahoti.

Earlier, a package including the ROSL scheme was announced for the garments sector in July 2016. According to data released by the Ministry of Textiles, after the package was announced, between July 2016 and March 2017, garment exports increased to $13.47 billion from $12.37 billion during the same period in the preceding year.

Since both "garments" and "made ups" fall under the category of "cut & sew" products and the requirement for labour is more or less similar in both the sectors, increase in the exports of made ups will certainly lead to the creation of more employment and the effect can be seen in the next three to six months, Lahoti added.