Post-GST, exporters of garments and made-ups began showing signs of struggle due to the inadequate export benefit and tariff barriers. Industry associations and export promotion councils pleaded with the government to hasten the GST and IGST refunds as the units were cash-strapped.

It was in this context that the Union Cabinet met on March 7 and approved the scheme to rebate the State and Central Embedded Taxes to support the textile sector and boost exports.

Hailing the new scheme (RoSCTL), the Southern India Mills’ Association Chairman P Nataraj said that the proposed rates have arrived at the right time - it will benefit the garmenting and made-ups segments, and strengthen the entire cotton textiles value chain.

The industry has been pleading to include spun yarn and fabrics under the RoSL benefit for the last two years. “ The government should have considered the spinning and weaving/ knitting segments as these suffer with surplus production capacity,” said the SIMA Chairman.

A Sakthivel, Vice Chairman, Apparel Export Promotion Council, said that the approval of the new scheme by exclusively earmarking ₹6,000 crore (to prevent delay in refund of embedded taxes) will benefit the apparel manufacturers and exporters, boost the country’s competitiveness in the export market and ensure equitable and inclusive growth of the textile and apparel sector.

M Shanmugham, President , Tiruppur Exporters’ Association, said, “The announcement has come at a time when the knitwear garment exporting units are going through pricing pressure from competing countries like Vietnam, Bangladesh, Cambodia, Indonesia, Sri Lanka, Pakistan apart from China. It is a welcome relief,” he added.

On reduction in the hank yarn obligation from 40 per cent to 30 per cent with effect from January 1, 2019, Nataraj said that it is a welcome move that would enable ease of doing business.

“The same has increased to over 1,600 million kg in 2018,” said Nataraj, and added that the number of handlooms stood at 31.37 lakhs in 1997-98. It got reduced to 21.46 lakh in 2009-10. The proportionate reduction in obligation works out to less than 15 per cent. There is therefore room to reduce the obligation further to 10 per cent.”

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