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Indian garment, made up sectors facing cash crunch: FIEO

Feb '20
Pic: Shutterstock
Pic: Shutterstock
As the Rebate of State and Central Taxes and Levies (RoSCTL) scheme was not implemented in 2019 and the Merchandise Exports from India Scheme (MEIS) also stopped from August last year for the apparel and made-up sectors, these sectors are facing a high liquidity crunch, according to Federation of Indian Export Organisations (FIEO) chairman Sharad Kumar Saraf.

Huge funds of exporters are now blocked under these schemes for no fault of theirs, Saraf said recently.

No funds have been disbursed since the announcement of the RoSCTL scheme on March 7 and MEIS from August 1 last year. This amount is nearly ₹6000 crore. Most of the apparel exporters are the micro, small and medium enterprises and some of them are already on the verge of closure and default, FIEO said in a press release.

Exporters of these products were surprised to see the gazette notification from the textiles ministry dated January 14 this year announcing one time additional ad-hoc incentive of 1 per cent to offset difference between RoSL and MEIS and RoSCTL from March 7 and December 31 last year.

This is completely contradictory to what was already announced by the government and factored by the industry to maintain their competitiveness in view of fierce competition. Many of them have also paid statutory taxes on RoSTL and MEIS benefits, Saraf said.

FIEO has now got to know that apparel exporters will not get 2 per cent MEIS even though that was announced earlier. It is unfortunate that government commitments are being ignored, he said.

To make matters worse, Saraf said, DGFT is now demanding the refund of MEIS paid between March 7 and July 31 last year, which is not only unfair, but also legally untenable because the policy once announced cannot be changed retrospectively, he added.

Fibre2Fashion News Desk (DS)

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