14th July, 2021

Government approves continuation of Rebate of State and Central taxes and Levies (RoSCTL) on Export of Apparel/ Garments and Made-ups

Continuation of RoSCTL Scheme would boost export in global markets; make Indian products globally competitive

Gives much needed fillip to the envisioned goal of “Aatmanirbhar Bharat”

Provide a level playing field to Indian Textiles’ exporters

This scheme is likely to provide direct and indirect employment to lakhs of people, especially women

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi ji has given its approval for continuation of Rebate of State and Central taxes and Levies (RoSCTL) with the same rates as notified by Ministry of Textiles vide Notification dated 8^th march 2019; w.e.f 1^st January 2021 on exports of Apparel/Garments (Chapters-61 & 62) and Made-ups (Chapter-63) in exclusion from Remission of Duties and Taxes on Exported Products (RoDTEP) scheme for these chapters. The scheme will continue till 31st March 2024.

The other Textiles products (excluding Chapters-61, 62 & 63) which are not covered under the RoSCTL shall be eligible to avail the benefits, if any, under RoDTEP along with other products as finalised by Department of Commerce from the dates which shall be notified in this regard. 

The Scheme shall be implemented by the Department of Revenue with end to end digitization for issuance of transferrable Duty Credit Scrip, which will be maintained in an electronic ledger in the Customs system. Revised guidelines for continuation and implementation of the RoSCTL scheme shall be prepared by the Ministry of Textiles in consultation with the Department of Revenue with necessary flexibilities to fine-tune the operational details, implementation modalities and scheduling etc.

Continuation of RoSCTL for Apparel/Garments (Chapter-61 & 62) and Made-ups (Chapter-63) is expected to make these products globally competitive by rebating all embedded taxes/levies which are currently not being rebated under any other mechanism.

Concept of Tax Refund for Exported Products

It is a globally accepted principle that taxes and duties should not be exported, to enable a level playing field in the international market for the exporters. This implies that all taxes and levies borne on the products which are exported should be either exempted or refunded to the exporters. This is called zero rating of the exports. In addition, to import duties and GST which are generally refunded, there are various other taxes/duties that are levied by Central, State and Local Government which are not refunded to the exporters.  These taxes and levies get embedded in the price of the ultimate product being exported. Such embedded taxes and levies increase the price of Indian Apparel and Made-ups and make it difficult for them to compete in the international market.

Following taxes and levies are not refunded and are part of embedded taxes:-

1. State Value Added Tax on fuel used for transportation of input, generation of power and for the farm sector.
2. Mandi Tax
3. Duty on electricity charges
4. Stamp duty on export documents
5. GST paid on input such as pesticides, fertilizers
6. GST paid on purchases from unregistered dealers etc.

Apparel and Made-up sector are highly labour intensive sector.  They employ a large number of people especially women.  It has been empirically established that an investment of Rs. 1 crore in manufacturing of apparel, garment and made-ups result in employment of 70 people.  So there is a need to remove the disability being faced by this industry in the interest of providing employment opportunities to the people.

Realizing the importance of refund of embedded taxes and duties, the Ministry of Textiles first launched a scheme by the name of Rebate of State Levies (ROSL) in 2016.  In this scheme the exporters of apparel, garment and made-ups were refunded embedded taxes and levies through the budget of the Ministry of Textiles. In 2019, the Ministry of Textiles notified a new scheme by the name Rebate of State and Central Taxes and Levies (RoSCTL) scheme for export garment and made-ups segments of textile industry covered in chapter 61, 62 and 63 of Drawback lines.  Under this scheme the exporters are issued a Duty Credit Scrip for the value of embedded taxes and levies contained in the exported product. Exporters can use this SCRIP to pay basic Customs duty for the import of equipment, machinery or any other input.  These SCRIPS are tradable so if the exporter does not need this for his personal use, he can transfer the same to any other importer.

Subsequently, the Department of Commerce has got Cabinet approval to launch a similar scheme RoDTEP for all other products which are exported excluding garment and made-ups segment of textiles. RoSCTL was launched in March, 2019 and had barely worked for a year before the pandemic set in. It has been felt that there is a need to provide some stable policy regime for the exporters.  In the textile industry, buyer places long term orders and exporters have to chalk out their activities well in advance, it is important that the policy regime regarding export for these products should be stable.  Keeping in view the same, the Ministry of Textiles has decided to continue the scheme of RoSCTL upto 31^st March, 2024 independently as a separate scheme for apparel/garment and made-ups in the chapter 61, 62 and 63 of Duty drawback lines.

It is anticipated that the continuation of RoSCTL scheme is likely to help apparel, garment and made ups segment by way of additional investment and give direct and indirect employment to lakhs and lakhs of persons especially women.

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SRTEPC applauds the Union Budget 2021-22 as visionary and growth oriented

The Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman tabled the first ever digital Union Budget 2021-22 in Parliament today. 

Welcoming the Union Budget 2021-22,  Shri Ronak Rughani, Chairman SRTEPC stated that the Union Budget 2021-22  is a Visionary and growth oriented budget especially in view of severe impact of COVID – 19 pandemic. Shri Ronak Rughani congratulated Hon’ble Prime Minister Shri Narendra Modi,  Hon’ble Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman, Hon’ble Union Textile Minister Smt. Smriti Zubin Irani and Hon’ble Commerce and Industry Minister Shri Piyush Goyal for taking care of the textile sector with encouraging initiatives.

Viewing the Budget as the Aatma Nirbharbharat Ka Budget, SRTEPC Head mentioned that it will generate more employment, create wealth and improve wellness of common masses. The scheme of Mega Investment Textiles Parks (MITRA) that will set up 7 Textile Parks over 3 years will certainly help the textile industry to become globally competitive and successfully attract large investments in the segment. The world class infrastructure under the MITRA with plug and play facilities will also open up lots of opportunities in the textiles sector to create employment and wealth and enable our exports to become globally competitive, Shri Ronak Rughani, Chairman SRTEPC added.
Rationalisation of the Customs duties on raw material inputs to manmade textiles is another initiative announced in the Union Budget 2021-22.  This will help the downstream textile value chain significantly in the country.  It announced to bringing nylon chain on par with polyester and other man-made fibers by uniformly reducing the BCD rates on caprolactam, nylon chips and nylon fiber & yarn to 5%. This will substantially help the textile industry, MSMEs, and exports, too. 

Shri Ronak Rughani, Chairman SRTEPC informed that on workers and labourer reforms the Union Budget 2021-22 has announced a milestone step by allowing women in all categories and also in the night-shifts with adequate protection. This historic reforms in the labour reforms by allowing women to work in the night-shifts will tremendously help the textile industry especially the value added segments in textiles like embroidery, weaving, etc. Shri Ronak Rughani, added. 

SRTEPC Head applauded and welcomed the Budget announcement regarding hike in capital expenditure to Rs. 5.45 lakhs in Financial year 2022 from revised estimate of Rs. 4.39 lakh in Financial Year 2021. 

He also mentioned that the focus and priority given on the export infrastructure in the budget such as Railways, ports, highways, etc. are the need of the hour for the country to achieve the objectives of Aatma Nirbharbharat.

Dated: 1st Feb 2021

The Apex Manmade Fibre Textile Council appeals to the Government to restore and continue the MEIS till RoDTEP Scheme is implemented

The Office Memorandum issued by the Department of Commerce, Ministry of Commerce and Industrydtd. 27.07.2020, informed that since allocated funds at this stage for MEIS for FY2020-21 (up to December) stand at Rs 9,000 crore and any additional allocation has not been conveyed by the DoR (department of revenue), the online MEIS module has been blocked on July 23, from accepting new application for shipping bills with LEO dated April 1 onwards to limit the issuance of any more scrips. The said OM also conveyed that MEIS scrips worth Rs 422.4 crore have already been issued to exporters for shipping bills with the “let export order” (LEO) since April 1.

Shri Ronak Rughani, Chairman, SRTEPC said that the sudden blockage of the online module to apply for MEIS on 23^rdJuly is a shock for the exporters and it is a discouraging message in these difficult times of COVID-19 pandemic. He informed that blockage and discontinuation of the incentives under the Merchandise Exports from India Scheme (MEIS) would severely hit exports from the country which have already been bleeding because of COVID – 19 pandemic. He further stated that MEIS was designedby the Government under the FTP 2015-20to provide relief to exporters to offset infrastructural inefficiencies and associated costs. Since currently infrastructural inefficiencies and associated costshave been multiplied due to lockdown, paralysed economic activities, labour shortage, etc. aftermath of the COVID-19 pandemic, the incentives and support of the MEIS have been extremely important. Our exports are already facing fierce price competition globally against exports form China and if the MEIS is also stopped, then the Indian manufacturers& exporters will be completely thrown out. Hence, to cushion the exports, Government should not cap the MEIS benefits. It is urgent and crucial for the Government to restore the MEIS benefits till the RoDTEP is activated, Shri Ronak Rughani added.

With a positive note Shri Ronak Rughaniinformed that the Ministry of Textiles may been observing this issue and Hon’ble Textile Minister Smt. Smriti Zubin Irani will certainly discuss the MEIS issue with the Hon’ble Finance Minister and Hon’ble Commerce Minister to protect the textile industry. Shri Ronak Rughanihas also been positive to receive a favourable order from the Hon’ble Finance Minister on the request made by the Hon’ble Commerce Ministerto reconsider the revenue department’s decision.

MEIS was introduced in the Foreign Trade Policy (FTP) for the period 2015-2020. The MEIS was launched as an incentive scheme for the export of goods. MEIS replaced the various export incentive schemes which gave different types of duty credit scrips namely, Focus Market Scheme (FMS), Focus Product Scheme (FPS), Vishesh Krishi Gramin Udyog Yojana (VKGUY), Market Linked Focus Product Scheme (MLFPS) and Agri Infrastructure incentive scheme. All duty credit scrips issued under the earlier incentive schemes were transferred to the MEIS.The rewards are given by way of duty credit scrips to exporters. The MEIS is notified by the DGFT (Directorate General of Foreign Trade) and implemented by the Ministry of Commerce and Industry.

30th July 2020