RoSCTL fate hangs in balance, Indian garment exporters call for action

03 Jan '24

2 min read

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Insights

Indian textile sector is at a crossroads as the RoSCTL scheme's future beyond March 31, remains uncertain.
It bolstered garment exporters in a tough global market.
With the deadline approaching, industry bodies like AEPC are advocating for an extension, emphasising ongoing global economic challenges and the scheme's role in maintaining competitive exports.

As the new year unfolds, the Indian textile sector grapples with a pivotal question: Will the Rebate of State and Central Taxes and Levies (RoSCTL) scheme's benefits extend beyond March 31, 2024? Introduced in 2021, RoSCTL has been instrumental in bolstering Indian garment exporters amidst a challenging global export market. With the industry mired in uncertainty, prominent industry bodies, notably the Apparel Export Promotion Council (AEPC), have demanded an extension of the scheme, citing the present challenging conditions in the global export market.

The scheme was approved to provide rebates on central and state taxes for garment exporters' outward shipments. The scheme is set to expire in March 2024 unless the government grants an extension. Rebates under the scheme include state taxes and levies such as VAT on fuel used in transportation, mandi tax, duty of electricity, and stamp duty on export documents. They also encompass embedded State Goods and Services Tax (SGST) and Central Goods and Services Tax (CGST) paid on inputs like pesticides and fertilisers used in the production of raw cotton, central excise duty on fuel used in transportation, and embedded CGST and compensation cess on coal used in the production of electricity.

Under the RoSCTL scheme, the maximum rate of rebate for apparel was 6.05 per cent, while for made-ups, it was up to 8.2 per cent. Garments and made-up segments such as home textiles products are covered under the scheme. It provided much-needed support to Indian garment and home furnishing exporters during COVID-19.

Global economic uncertainties continue due to the Russia-Ukraine and Israel-Hamas conflicts. Garment and textile exports have been severely hit by the global challenges, affecting not only India but also all major exporting countries. The RoSCTL has supported Indian exports to remain competitive in the global export market. The market situation has not changed in the new year either. However, the question hanging in the balance is whether the government will extend the scheme.

The apparel exporters' body AEPC has recently urged the government to extend the rebate scheme, RoSCTL, for three more years as it is vital in the current headwinds. It stated that market sentiments have reached a new low and the traditional markets of the US and the European Union (EU) are facing unprecedented recessionary trends.

Fibre2Fashion News Desk (KUL)

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