The textile industry has asked the government to consider reimbursement for embedded duties such as market committee fee and cross subsidy surcharge. Industry representatives also plan to meet the Union Commerce Minister this week to take up this and other issues such as ‘low’ ROSL rates.
Following the revision of duty drawback rates, the Centre had announced new rates for the Rebate of State levies (ROSL) for exports last week. The sector saw ROSL rates as ‘very low’ and said this would hit exports of textile and clothing products.
‘Hold discussions first’
Industry sources said that the government should first hold discussions with the industry on duty drawbacks, take into account the actual duties paid and ‘only then work out the drawback rates’. For instance, for processed fabric, GST for the fabric is 5%. But, input tax rates are higher. So, there is accumulation of input tax credit that is not refunded. This is not covered under the drawback either.
With exports falling, there is concern around debt levels. In the case of yarn, monthly exports have fallen to 90 million-100 million kg compared with 120 million kg-140 million kg seen in 2014. Though a chunk of this went to China, about 30 million kg reached markets such as Latin America. Now, exports to China are declining and ‘there is barely any export to new markets’.
Significant spinning capacity is under the threat of turning into non-performing assets, said another source. To revive exports, “the government should bring back Merchandise Exports from India scheme and export incentive scheme for cotton yarn,” said P. Nataraj, chairman, Southern India Mills’ Association.