The export scenario has once again become a matter of concern. As per the latest reports after nearly 14 consecutive months of buoyancy, the momentum of export growth has dipped in October 2017. The growth of exports has not only dropped by 1.12% but has been the slowest since July last year. This however has not been surprising and has been attributed to the effects of GST. What is more worrying is that the textile industry including Man-made yarn and fabrics is one of the sectors which has been in the red. More so since the sentiments were upbeat with the data released by the Ministry of Commerce, Government of India showing that exports of MMF textiles for the period April-August 2017-18 were US$ 2483.45 million, registering a growth of 3.51% as compared to the corresponding period in the previous year. Besides all the product categories viz. fabrics, yarn, fibre and made-ups had recorded growth during that period. The need of the hour therefore is for the Government to provide relief to the exporters lest the situation will continue to worsen in the coming months. Meanwhile, the Council is making all efforts to voice member exporters’ grievances to the Government. I am confident that a solution to the problems will be worked out and this temporary phase too will pass off. I am also sure that if corrective steps are taken by the Government, exports of textiles in general and MMF in particular will regain its momentum.
Sharp fall in export across the Textile Value Chain is felt particularly by the micro, small and medium enterprises (MSMEs) who are facing liquidity problem to pay GST for four months in a row without getting any refund. The delay in reimbursement of refund has created a huge blockage of working capital which has hit the exporters’ day-to-day business transactions. I have requested the Government to take immediate remedial measures to prevent a further decline. I once again appeal to the Government to keep exports out of the purview of GST as paying the tax first and getting a refund is cumbersome, complex and complicated, affecting exports.
I am glad to inform you that the members of the Council had a Meeting with the High Level Drawback Committee on 31st October 2017 at Ahmedabad. The Drawback Committee headed by Shri G. K. Pillai and other members including Shri Gautam Ray, Shri Y. G. Parande and Shri Anand Kumar Jha, Under Secretary of the Drawback Division have had a Meeting with EPCs to seek their views of the textile industry on duty drawback rates for exports following the implementation of Goods and Services Tax (GST). During the Meeting I have pointed out that majority of MMF textile exporters were operating under the Duty Drawback Scheme, and hence appropriate drawback rates are needed to neutralize the duties paid so that they can become competitive globally and although GST has subsumed most of the taxes there are significant unrebated and embedded taxes which still remain out of the ambit of GST. I have further stressed that embedded duties should be made refundable and Drawback under GST should reimburse state levy and taxes to fabric and yarn exports as is done in the case of apparel and made-ups. I have also emphasized that unsubsumed taxes and unrebated duties/taxes like clean energy cess on import of coal, electricity duty, bank charges, stamp duties, VAT on crude oil/petroleum products, basic customs duty and other levies by State/local authorities, etc which have not been considered should be included in the Drawback Scheme. The Duty Drawback Committee noted the factors that the Council has taken into account while calculating the proposed all industry duty drawback rates for Man-Made fibre Textiles that fall under the purview of the Council and requested the Council to submit a brief Note on all those issues raised to the DBK Department at the earliest to enable them to recommend the same to the GST Council for consideration and decision.
The Committee has also been indicated that the transitional period for continuing the Drawback rates be extended up to 31st March 2018.I have also discussed for consideration of ROSL on Manmade fabrics as lot of State levies remain unrebated at fabric stage also. The meeting with the DBK committee was highly proactive and fruitful which may lead to favourable DBK rates for MMF textiles.
As instructed by the Drawback Committee, the Council has collected Industry data on Electricity Duty, Banking Charges and Stamp Duty from manufacturers of Manmade fibre textile items (such as yarn, fabrics and made ups, except fibre) who pay the duty but don’t get rebate of the same in the GST regime. Based on this data, the Council has made calculations and sent the same to the Drawback Department. This data will substantiate our proposal for a higher rate of Duty Drawback to the entire MMF Textile value chain and also neutralize the duties paid so that our exporters can become globally competitive.
Import of huge amount of cheap fabrics into India was a serious concern for the MMF textile industry on which several representations were sent from the Council to the concerned Ministries of the Government. I welcome the initiative taken by the Government to increase the Effective duty on Fabrics to 20% and Basic Customs Duties (BCD) on Fibres & Yarns to 20% and on Fabrics and Made ups to 25%. I take this opportunity to express my gratitude to the Hon’ble Prime Minister Shri Narendra Modi, Hon’ble Finance Minister Shri Arun Jaitley, Hon’ble Minister for Commerce & Industry Sri Suresh Prabhu and Hon’ble Union Minister for Textiles and I & B Smt. Smriti Zubin Irani for taking this bold initiative. By increasing the Effective Duty on Fabrics the Government is in consonance with its “Make in India” initiative and encourages the domestic value added segment that provides employment to a large section of the population in the country. Hike in BCD will give sufficient room at the hands of the Government for increasing the Effective Duties in future to protect the domestic textile industry.
Friends, the Council is proposing to bring out a Diary for the year 2018, you may have already received the circular for the same, if not kindly get the details from our website. I request the members to take advantage of this unique medium to advertise their company and products.
With warm regards,
SRI NARAIN AGGARWAL
20th Nov, 2017