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India’s textile export industry gets a leg up with RoSL budget hike

Indian Textile Industry
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The Government of India has marked up the Budget 2018 allocation for ‘Remission of state Levies’ (RoSL) scheme to Rs. 2,163.85 crores from Rs. 1,555 crores – a 39 per cent increase over FY 2017-18.

The increase in RoSL alongside a Rs. 6,000-crore package declared for the apparel and textile industry in 2016 would give a fillip to textile exports from the country, said Union Textile Minister Smriti Irani. Around Rs. 1,800 crores have already been provided to the industry as part of the package, while a payment of Rs. 300 crores is envisaged for the current fiscal, as she said.

The Minister furthermore stated that the Technology Upgradation Fund Scheme (TUFS) outlay in the Budget has also been hiked by 15 per cent. Noticeably, the RoSL scheme is a major constituent of the aforementioned package that enables the exporters to offset indirect taxes charged by the states that are incorporated in exports. Importantly, the textile exporters can claim RoSL on top of duty drawbacks and additional incentives.

Apparel Resources spoke to some of the key exporters to garner their reaction on the developments and discuss other related issues as well.

Lauding the Ministry of Textiles (MoT), Gurugram headquartered Matrix Clothing’s Managing Director Gautam Nair said, “The hike in RoSL funds in Budget 2018 will go a long way in easing the pressure off the exporters, especially the smaller ones who make up 90 per cent of our business.”

There was under-allocation of RoSL funds in the last year’s budget which resulted in the non-payment of refund claims. A lot of exporters have been facing financial stringency due to locked-up funds and there is a need to expedite the disbursement of RoSL benefits, he further added.

Expressing his delight on the move, Ludhiana-based NG Apparels’ Marketing Director Arrpiit Guptaa stated that it’s heartening to see the Government stepping up its support to bolster apparel exports.

“The sector is currently undergoing difficult times and the increment in RoSL funds will positively impact the entire value chain and will help grow India’s share in global apparel exports, which currently is 1/5th of China,” he feels. However, Guptaa also expressed his concern over the dwindling fortunes of apparel industry of Ludhiana, one of India’s largest manufacturing hubs.

While counting factors like rising wages, diminishing margins, unpredictable weather, etc., responsible for the decline, he opines that increase in RoSL rates would definitely give some push to the sector to endure this difficult phase.

On the other hand, Nair at Matrix Clothing rues that there is no provision for the increase in RoSL rates in this year’s budget. He notified that there was a 3-month transition period in 2017 wherein from July to September old rates were applicable and new rates came in October.  “The rates, in fact, have come down by almost half (1.75%) of what was earlier (3.5%). We have been pleading with the Government that this has seriously affected the apparel industry,” he tells.

Apropos the apparel exports figures for September-December 2017, Nair observed that there was a serious decline on the Y-o-Y basis and the sector perhaps has not experienced such consistent decline in a long time. “This should be a huge concern for our industry and the country. The apparel industry is very labour-intensive. If exports go down so sharply and consistently, the employment will also go down,” he cautions.

Apparels is a price-sensitive industry, maintains Guptaa at NG Apparels, adding that further support from the Government will help improve the infrastructure over time and increase India’s  competitiveness against rivals like Bangladesh.

The apparel manufacturers have to abide by the laws, extend all benefits their employees and still be able to provide profitable pricing to clients. For this, they have to have the Government’s support or else it is just a loss for all, he notes. “I urge MoT to design new policies to enhance India’s textile and apparel industry competitiveness vis-à-vis other countries in long-term,” Guptaa concludes.