Jaipur, Aug 23 (KNN) Garment exporters of Rajasthan have expressed apprehension over loss of 15 per cent of their margins due to Rebate of State and Central Taxes and Levies (RoSCTL) and are seeking amendment to its structure.

Given the situation, exporters also foresee a decline in export competitiveness, like their other counterparts across the country.

The state’s garment manufacturing sector is worth Rs 2,500 crore. 

Explaining the matter, Vimal Shah, President of Garment Exporters Association of Rajasthan (GEAR) said, “The textile industry wants the government to restart cash reimbursement instead of these tradable scrips, as these scrips are trading at 20 per cent discount.”

These scripts are sold by exporters to importers, who in turn can pay their import duty with these purchased scrips as an alternative to cash import duty payments. This is resulting in substantial cash transfer from exporters to importers, said Shah in a statement.

Vijay Jindal, Member, Export Promotion, AEPC & President, GEMA said, “RoSCTL scheme provides rebate against the taxes, levies, etc. already paid by the exporters on the inputs. This rebate has been converted into scrips that are tradable i.e. exporters can sell scrips to the importers and importers, in turn, can pay import duty with these purchased scrips as an alternative to cash import duty payments.”

“While it was in discount earlier also, but now the discount has gone up from 3 per cent to about 20 per cent discount on the scrips. This discounting of scrips benefits importers, who are taking undue advantage at the cost of exporters,” added Jindal.

RoSCTL was launched with the intention of making India’s textile industry competitive and strengthening its exports. 

However, certain changes were made to the scheme in September 2021 and its current form is eroding the export margins of the domestic textile industry. 

Based on estimated calculations, of the total USD 16 billion in apparel exports, around 5 per cent is reimbursement, which is roughly Rs 6,000 crore.

At a broad level, given a discount of 20-25 per cent on this, there is a direct hit of around Rs 1,500 crore on the feeble margins of companies operating in the apparel sector.

The demand has been in line with the government’s intention, which was always to reimburse the exporters but due to the discounting of scrips, the purpose and intent of this entire scheme is defeated, said the exporters.

In its current form, the discounting of scrips benefits importers, who are taking undue advantage at the cost of exporters.

The garment and textile industry has said that if the government does not immediately make amendments to the RoSCTL structure, there is a concern that the industry may lose its competitive edge due to cost inefficiencies.  (KNN Bureau)