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GST hurdles: Apparel exporters meet Chief Economic Advisor to express concern over dwindling exports

Recently published figures show that India’s apparel exports has shown a decline of 39 per cent (in US$ terms) for the month of October’17. There has been an overall decline of 5.94 per cent in the exports of apparels from India. Earlier, AEPC had indicated about the decline in exports in the coming days on account of the issues related to implementation of GST.

Ashok Rajani Chairman AEPC“In the wake of dwindling apparel exports, AEPC has been engaging with the policy makers for an early resolution of the issue which is hampering the apparel industry, post GST roll out. It has already made several presentations to the Ministry of textile, Drawback Committee, NITI Aaayog, Parliamentary Standing Committee etc,” informed an AEPC source.  As part of its outreach strategy, an AEPC delegation led by its Chairman Mr. Ashok Rajani met Chief Economic Advisor (CEA), Dr. Arvind Subramanian on November 15 to express concern on the decline of exports, post GST rollout. In his meeting with the Chief Economic advisor, Mr. Rajani informed him that for the period of Jul-Oct, overall exports have declined by six per cent which is mainly on the account of sharp reductions in the effective drawback rate and RoSL rate and has not only reduced the total reimbursements of duties for the sector but has also affected the export prospects of the apparel sector drastically.

Apparel exports“The important point is the principle of reimbursement of domestic non-GST and GST central taxes in addition to customs through the drawback mechanism. This requires an amendment in the drawback rules to provide for reimbursement of GST duties. We therefore urged Dr. Subramanian that pending these legislative changes, the total duty reimbursements to the apparel sector be retained at pre-GST stage of 7.5%drawback without input tax credits, plus 3.5% of RoSL. These pre-existing levels of reimbursement through the drawback and the RoSL routes may be maintained upto 31 March, 2018 to provide immediate relief to the reeling apparel sector”, informed Mr. Rajani.

The AEPC delegation also shared with the CEA about the recommendation of the Drawback Committee for a composite rate for apparel sector without GST credits as an option. They urged the CEA for an early expedition of the issue of composite rate for apparel sector as the move will benefit a large number of small scale exporters.

Feature pic: Courtesy Bindu Export, India’s Leading Apparel Manufacturer and Exporter. 

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