Refunds for garments exporters: Govt clears Rs 3,000-crore pending claims, more to follow

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Published: May 8, 2020 5:50:58 AM

In an office memorandum dated April 30, reviewed by FE, the revenue department has said it has approved the release of the RoSL benefits, which will, however, be in the form of scrips, instead of cash.

But the government has already scrapped benefits under the Merchandise Exports from India Scheme (MEIS) for garments and made-up exporters retrospectively from March 7, 2019. (Representative image)But the government has already scrapped benefits under the Merchandise Exports from India Scheme (MEIS) for garments and made-up exporters retrospectively from March 7, 2019.
(Representative image)

To ease liquidity for garment and made-up exporters, the government has cleared long-pending claims worth roughly Rs 3,000 crore since January under a so-called Rebate of State and Central Taxes & Levies (RoSCTL) scheme, trade sources told FE.

The revenue department has also asked the directorate general of foreign trade (DGFT) to release Rs 464 crore against pending claims under another scheme, Remission of State Levies, which was replaced with the RoSCTL programme — meant for compensating them for various state as well as central government impost — on March 7, 2019. Benefits under the RoSL were stuck for more than a year, triggering protests from the cash-strapped exporters.

In an office memorandum dated April 30, reviewed by FE, the revenue department has said it has approved the release of the RoSL benefits, which will, however, be in the form of scrips, instead of cash. Exporters will also be allowed to use the scrip for the payment of customs and central excise duties.

Apparel Export Promotion Council chairman A Sakthivel welcomed the government’s move and expected that the benefit comes at a time when the industry is going through a rough patch due to the Covid-19 outbreak.

The move comes at a time when the Covid-19 outbreak has already accentuated a slowdown in merchandise exports. Outbound shipments of garments shrank 4% year-on-year in FY20 to $15.5 billion (even on a favourable base), aiding a decline in overall exports that contracted by close to 5% in FY20.

But the government has already scrapped benefits under the Merchandise Exports from India Scheme (MEIS) for garments and made-up exporters retrospectively from March 7, 2019.

However, to offer some relief to the exporters from the retrospective move, an earlier government order had said if the RoSCTL benefit between March 7 and December 31, 2019, was lower than the combined incentives under the MEIS and RoSL (which they were enjoying until the RoSCTL roll-out), the government would provide an “additional ad-hoc incentive” of up to 1% of FoB value of exported products, with a cap of Rs 600 crore, for this period.

But, compounding exporters’ woes, it had asked those who had availed of the MEIS benefits between March 7 and July 31, 2019 ( after which MEIS benefits were blocked to them), to return the incentives, or the amount could be suitably adjusted against their future benefits. Exporters had said even with the extra incentive, the total benefit was lower by as much as two percentage points than what they used to get in March 2019.

A senior government official had earlier told FE that the resource-strapped revenue department felt that since garment/made-up exporters were to get the RoSCTL benefits (which are not extended to other exporters), they shouldn’t be simultaneously granted the MEIS benefits, which, in any case, had come under the WTO scrutiny.

However, the textile ministry was learnt to have been backing the garment exporters’ claims and wanted both the MEIS and RoSCTL to co-exist.

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