Apparel exporters facing liquidity crunch as funds are blocked: FIEO

Apparel and made-ups exporters are facing "acute" liquidity problem as their huge amount of funds are blocked under a rebate scheme for state levies and an export incentive programme, an exporters' body flagged on Monday.

The Federation of Indian Export Organisations (FIEO) said that around Rs 6,000 crore of duty refund claims have not been disbursed under the Rebate of State and Central Taxes and Levies (RoSCTL) and the Merchandise Export from India Scheme (MEIS) from March 7 last year and August 1, 2019, respectively.

The RSCTL scheme was not implemented in the entire 2019 and MEIS also stopped from August last year for apparel and made-ups sectors, FIEO President Sharad Kumar Saraf said in a statement.

"This is a fatal blow to the apparels and made-ups industry, which is one of the largest employment generation industry particularly supporting the women workers," he said.

Saraf said that no funds have been disbursed since the announcement of the RoSCTL scheme from March 7 last year and the MEIS from August 1, 2019.

"This amount itself is nearly Rs 6,000 crore. Most of the apparel exporters are from MSME sector and some of them are already in the process of closure and default," he added.

He said that exporters of these products were surprised to see a gazette notification dated January 14 this year by the textiles ministry announcing one-time additional ad-hoc incentive of 1 per cent to offset difference between MEIS and RoSCTL from March 7, 2019, to December 31, 2019.

"This is completely contradictory to what was already announced by the government and factored by the industry to maintain their competitiveness in view of fierce competition. Many of them have paid statutory taxes also on RoSCTL and MEIS benefits," he said.

The FIEO president said it is very "unfortunate" that the commitments are being "ignored".

To make the matter worst, Saraf said the directorate general of foreign trade is now demanding the refund of MEIS paid between March 7, 2019, and July 31, 2019.

"This is not only unfair but also legally untenable because the policy once announced cannot be changed retrospectively," he said.

He said that the government must honour the commitment made to the exporters.

"We are already fast losing our business to other countries like Vietnam, Cambodia, Myanmar, Bangladesh. The industry would have grown at least by 15 per cent due to China US trade war and now due to deadly virus in China," he said.

He urged the government to intervene to address the issue of exporters.