The revival of export growth was resumed when there was news that the government would announce Rebate of State and Central Taxes and Levies (RoSCTL) from October 2017 onwards though the announcement came on March 2019.
Tirupur Exporters’ Association (TEA) has urged the government to come out with an alternative scheme with the same benefits of the Merchandise Exports from India Scheme (MEIS) for the growth of the readymade garments industry.
In its appeal to the Centre, TEA said that MEIS, a lifeline support given to exports including readymade garments, was removed from August 1, 2019 onwards due to more pressure coming from the WTO, further to a complaint lodged by the US with the WTO dispute settlement body. Actually the scheme (MEIS) was introduced for offsetting the infrastructural inefficiencies faced by exports of specified goods including readymade garments to provide a level playing field. It is a fact that the enhanced competitiveness is mainly needed to sustain in the global market.
When the exporting units are in a less competitive and disadvantageous position, the buyers obviously resort to competing countries and the concern is that if the buyers leave India and settle in a competing country, it would be difficult to bring them back immediately. In view of this, sops are required for sustenance of the readymade garment (RMG) sector, said Raja M Shanmugham, president, TEA.
“We wish to point out that the removal of MEIS will crumble the business created over a period of time. Non-addressing of some of the core issues, including arresting infrastructure deficiency, signing of FTA with the EU, CEPA with Canada, CECA with Australia and bringing down the interest rates will further put pressure on the industry,” Shanmugham said in TEA’s letter to the Centre.
He further said that TEA apprehends to mention the removal of MEIS, incentive at 4% given to the RMG sector at this juncture will straight away lead to reduction of their competitiveness in the global market and the exporting units will find it difficult to sustain in the challenging business environment. They emphasis a point that the RMG sector, more than 80% of the units in SMEs, is now engulfed in crisis of confidence.
According to him, when TEA has been moving steadily to increase its revenue from Rs 12,500 crore in FY2013 to Rs 45,000 crore in FY2019, their original target to achieve Rs 1 lakh crore business by FY2020 will be hit with the removal of MEIS and other glitches and they may have to revise it to FY2022.
The revival of export growth was resumed when there was news that the government would announce Rebate of State and Central Taxes and Levies (RoSCTL) from October 2017 onwards though the announcement came on March 2019. The increase in interest subvention to MSMEs from 3% to 5% was also helpful in reviving MSME exporting units. India has already been relegated to sixth rank in the global RMG exports with a global market share of 3.9%, while Bangladesh and Vietnam are enjoying second and third position with market share of 7.9% and 5.2%, respectively.