As the country braces for the roll out of the goods and services tax (GST) regime from July 1, apparel exporters have asked the government to retain the remission of state levies (RoSL) under the duty drawback scheme, which was announced last year as part of the Rs 6,000-crore package for the garments industry, even in the new regime.
RoSL, under which garment exporters get refunds from the Centre against all the levies they pay at the states’ level, is the most important scheme (with fiscal significance for the government) in the garments package. The government has already provided `1,900 crore so far for this scheme. For the current fiscal, the government has budgeted `1,555 crore for the RoSL to the garments industry, although exporters are unsure if the scheme is indeed going to be retained under the GST regime. So, they are seeking at least a clarification on this issue.
To buttress their case, exporters said garment exports went up close to 32% in April from a year earlier, mainly due to the RoSL benefits. Apparel Export Promotion Council chairman Ashok G Rajani said as many as 80% beneficiaries of the RoSL scheme are exporters with a turnover of less than `10 crore per year. He said the AEPC has made a representation to finance minister Arun Jaitley to continue the RoSL in the current form even under the GST regime.
Apparel exports have been registering double-digit growth since the start of the disbursement of RoSL (around December last year).
During March and April, garment exporters were able to increase production by around 30% and employed at least 5% more workers during the same period, according to Rajani.
Exporters say the RoSL scheme is in tune with the economic principle of ‘zero rating’ of export products and in recognition of the fact that at present only central levies are rebated by the way of drawback schemes.