Association Demands an Increase in the Rates of Duty Drawback and ROSL to Boost Apparel Exports
New Delhi, November 28, 2017: All the major apparel exporters associations of North India have welcomed the increase in the rates of Merchandise Exports from India scheme (MEIS) and RoSL. As per a notification issued by the ministry of textile, the new MEIS rates shall be effective from 01.11.2017 while the RoSL rates shall be effective from 01.10.2017.
The NCR region, comprising Delhi, Noida, Gurgaon and Faridabad, comprises around 35% of the overall apparel manufacturing base of India. This region is strong in the top export categories of woven summer wears, specially value added (with embellishments and hand work) women’s tops, children wear and accessories. The region is one of the fastest growing clusters in India, due to its good access to skilled manpower, inputs and a vibrant entrepreneurial community. While thanking the government for enhancement in the rates of MEIS and RoSL, the exporters associations in this region – The Apparel Exporters & Manufacturers Association (AEMA), Garments Exporters Association (GEA), Okhla Garment and Textile Cluster (OGTC) and Noida Apparel Export Cluster (NAEC) have also expressed disappointment in the dilution of the drawback and RoSl benefits to the industry, post GST.
Commenting on the enhancement in the rates of MEIS, Mr. Sudhir Sekhri, Chairman, Garment Exporters Association (GEA) said, “We welcome the increase in the rates of Merchandise Exports from India scheme (MEIS) and would like to thank the government this initiative. The enhancement in MEIS rates will help in the fulfilment of orders for the Christmas festival as it will result in easing the blocked capital”.
India’s apparel exports has shown a decline of 39 %( in US$ terms) for the month of October’17 with an overall decline of 5.94% in the exports of apparels from India as per the last export data .In the wake of dwindling apparel exports, the exporters have requested the Government for an increase in the amount of duty drawback and ROSL from the existing rates in order to mitigate the losses incurred due to the reduction in the RoSL rates. The industry estimates indicate that the blockage of taxes is significantly higher than the drawback and RoSL rates announced and therefore a higher rate of duty drawback and RosL should be announced at the earliest, to recover the losses.
Talking about the issue of increase in duty drawback and RosL, Mr. PMS Uppal, President, Okhla Garment and Textile Cluster (OGTC) said, “We have already seen the export figures for the period of Jul-Oct where overall exports have declined by 6% mainly on the account of sharp reductions in the effective drawback and RoSL rates. The apparel Industry is witnessing a major crisis and to prevent the situation from deteriorating further, we have urged the government to increase the rates of duty drawback and RoSL as the sharp reduction in the rates have dealt a huge blow on the competitiveness of the Industry. In order to stop the migration of the buyers, it is extremely important that Government increase the rates as the migration of buyers would not only lead to job losses but will also pose a challenge for the Industry”.
“The apparel sector is one of the largest employer after agriculture and is contributing heavily towards the inclusive growth in the country. The sector provides employment to the women in large numbers and hence contributing heavily towards women empowerment. Therefore it is extremely important that Government addresses the issues raised by the Industry in order to stem the decline in exports, as Industry is not in a position to bear further losses and in the absence of policy incentives, the sector will be forced to shed jobs.” said Mr. Lalit Thukral, President, Noida Apparel Export Cluster(NAEC)
The apparel export bodies have also expressed concern on the cost advantages that the neighbouring countries like Bangladesh enjoy. The Exporters have also expressed concern on the preferential tariff in European Union.
Mr. Vinod Dhawan President, Apparel Exporters & Manufacturers Association (AEMA) said, “Our major competitors like Vietnam and Bangladesh have several cost advantages on account of competitive wages. While the minimum wage in India is in the range of US$ 130-US$ 155 per month, the minimum wage in Bangladesh is $ 60 per month. On the issue of Issue of preferential tariff, Mr. Dhawan said, “India has to pay the duty of 9% in EU vis- a-vis the 0% of Bangladesh and Vietnam besides other logistics and infrastructure benefits”.
Recommendation of Garment Exporters Associations:
- The old drawback rates may be restored till March 2018, as the industry needs time to adjust to the GST system
- Also, full refund of blocked taxes, highlighted by industry may be looked into
- The refunds may be expedited to reduce capital blockage
- Clarity may be provided on the e-wallet mechanism
- Fabric and inputs need to be made available to the garment industry at lower rates