There has been a 35 per cent decline in cotton yarn exports in the first quarter of the current fiscal, prompting the Government to set up an inter-ministerial committee of secretaries to develop a new export incentive scheme focusing on the yarn and fabric industry.
The Prime Minister’s Office has reviewed the Rebate of State and Central Taxes and Levies (RoSCTL) scheme and the demand of the industry to extend this scheme to other segments of the textile industry.
“An inter-ministerial committee has been set up to look at RoSCTL for all products including yarn, which is in trouble,” informed an official with knowledge of the development.
Exports of cotton yarn and fabrics declined 9.98 per cent and 10.54 per cent, respectively, in July.
The committee will help replace the extant Merchandise Exports from India Scheme (MEIS), after the commerce department raised concerns over it and the scheme was challenged by the US in WTO.
RoSCTL will allow reimbursement of duties on export inputs and indirect taxes via freely transferable scrips. Scrips are incentives that can be used to pay duties.
The finance and commerce ministries are at discourse over the phasing out of the MEIS and introduction of the new scheme, which is compliant with global trade norms.
“India’s textile and apparel trade gap with China, which is also a member of the Regional Comprehensive Economic Partnership agreement, has widened because India is losing its share of cotton yarn to Vietnam and Pakistan due to lower cost,” the industry representative said.