Revive incentives, slash tax to make exports viable

Revive incentives for exports of apparels which were available before the Goods and Services Tax (GST) rollout, sector leaders have urged the government ahead of the Union Budget next month. They have warned that if the competitiveness is not regained, Indian exporters will lose buyers and it would be difficult to get them back.

In a letter to Union Textiles Minister Smriti Irani, Apparel Export Promotion Council (AEPC) said that before the rollout of GST, exporters of cotton apparel got total duty drawback of 11%, while exporters of Man-Made Fibre (MMF) garments got 13% duty drawback.

Post-GST, they get 3.5% and 4.0% duty drawback. This created a loss of 7.5% and 9.0% respectively. After a hue and cry by exporters, the government had increased the duty drawback by 2%, which is applicable from November 1, 2017 onwards.

"Still there is a deficit of 5.5% for cotton garment exporters and 7.0% for MMF garment exporters. This is increasing the cost of Indian exports and players are losing business," said HKL Magu, chairman of AEPC.

Duty drawback is available if the raw materials are imported.

According to AEPC data, exports dropped by 10% in November 2017 compared to the same month a year ago and by 8.8% for December 2017.

Meena Kaviya, chairperson of Textile Committee of Gujarat Chamber of Commerce and Industry (GCCI) said that while the government has raised import duties on fabric, it is not the case with garments, resulting in cheaper imports.

OTHER DEMANDS

• Consider product innovation as R&D; 5% I-T exemption
   
• Extend facility of govt paying PF with UID number to all
   
• Exempt apparel buying agents from paying 18% GST
   
• Ensure 24x7 clearance by customs
   
• Exempt IGST on import under Export Promotion Certificate scheme