Indian govt extends RoSCTL scheme for apparel & made ups exports

Continuation of the scheme for proposed duration of two years will provide stable policy regime which is essential for long term trade planning, more so in the textiles sector where orders can be placed in advance for long term delivery. It will ensure predictability and stability in policy regime, help remove the burden of taxes and levies and provide level playing field on the principle that ‘goods are exported and not domestic taxes’, the ministry of textiles said in a press release.

Earlier, the industry had stated that the extension of the scheme is crucial in the current market conditions. This move will provide a stable policy regime, which is essential for long-term trade planning, particularly in the textiles sector, where orders can be placed in advance for long-term delivery.

Sanjay Jain, managing director of TT Limited and former chairman of the Confederation of Indian Textile Industries (CITI), told Fibre2Fashion, “The extension of RoSCTL scheme is a welcome step. It will provide clarity for the industry to plan for coming years.”

The Cabinet had given approval of the scheme up to March 31, 2020, and further approval was given for continuation of RoSCTL till March 31, 2024. The present extension up to March 31, 2026 helps in enhancing export competitiveness of garments and made-ups sectors. It makes apparel/garments and made ups products cost-competitive and adopt the principle of zero-rated export. The other textile products (excluding Chapter 61, 62 and 63) not covered under the RoSCTL, are eligible to avail the benefits under RoDTEP along with other products, the release added.

The objective of the scheme is to compensate for the State and Central Taxes and Levies in addition to the Duty Drawback Scheme on export of apparel/garments and made-ups by way of rebate. It is based on an internationally acceptable principle that taxes and duties should not be exported, to enable a level playing field in the international market for exports. Hence, not only indirect taxes on inputs are to be rebated or reimbursed but also other un-refunded State and Central taxes and levies are to be rebated.

Rebate of State Taxes and Levies includes VAT on fuel used in transportation, captive power, the farm sector, mandi tax, duty on electricity, stamp duty on export documents, and embedded SGST paid on inputs such as pesticides and fertilisers used in the production of raw cotton, as well as purchases from unregistered dealers. It also covers coal used in the production of electricity and inputs for the transport sector.

Rebate of Central Taxes and Levies comprises central excise duty on fuel used in transportation, embedded CGST paid on inputs such as pesticides, fertilisers, etc., used in the production of raw cotton, purchases from unregistered dealers, inputs for the transport sector, and embedded CGST and Compensation Cess on coal used in the production of electricity.

Remission of Duties and Taxes on Exported Products (RoDTEP) is also set to expire on June 30, 2024. However, the government has not yet announced an extension on this scheme.

Fibre2Fashion News Desk (KUL)