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Garment exporters demand restoration of pre-GST rates

Garment exporters demanded the restoration of duty drawback and Remission of State Levies (ROSL) rates to pre-GST levels, claiming that a whopping six million jobs may be lost in the sector if urgent remedial measures were not taken.

India's apparel exporters are facing intense competition from countries like Bangladesh, Pakistan and Vietnam, owing to lower competitiveness.

"The average duty drawback that we were getting per-GST was 11.5 percent and the Remission of State Levies (ROSL) was an average of 3.5 percent. Post GST, the average drawback has come down from 11.5 percent to 2.25 percent.

"Last week, the government has been very magnanimous in increasing the ROSL from the 0.39 percent which was announced in July to 1.7 percent, but we are still short of the 3.7 percent which we were getting earlier," said Sudhir Sekhri, Chairman, Garment Exporters Association.

Addressing a press conference, garment exporters alleged that the government was "making it difficult" for them to run their businesses and they had to incur additional compliance costs due to the "tardy implementation" of the Goods and Services Tax.

"We had a decline of 41 percent in (garment exports) in October. There may be a 30 percent decline in November. April-October there is a downfall of 5.8 percent. If this trend continues, for the entire fiscal it could be 15-20 percent," said Vinod Dhawan, President of Apparel Exporters and Manufacturers' Association.

Ready-made garment exports dipped by about 40 percent to USD 829.44 million in October.

The garment exporters fear that 6 million jobs may be lost in the sector, which is currently giving direct employment to 12.9 million people, going by the fall in exports.

The exporters also demanded speedy conclusion of a free trade agreement with Europe for India to regain its export competitiveness, as the industry had to pay 9.8 percent duty for shipping to Europe.

Besides, the garment exporters demanded clarity on the e-wallet mechanism, full refund of blocked taxes and that fabric and other inputs be made available to the garment industry at lower rates.

The government last week announced the post-GST rates for claiming a rebate of state taxes under the scheme for ROSL on exports of readymade garments and made-ups.

It also doubled the rates for incentives under an export promotion scheme -- MEIS -- to 4 percent for readymade garments and made-ups.

India’s Apparel exports rose to USD 17.5 billion in 2016 -17 from USD 16.8 billion in 2014-15.

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