Lack of clarity on DBK rate, ROSL to impact textile exports

The textile industry are unable to book orders due to lack of clarity on the duty drawback rate and Rebate of State Levies (ROSL) on export of garments and made up textile articles, and this could impact India’s textile exports, said P Nataraj, Chairman, the Southern India Mills Association (SIMA).

For the textile industry second half of September could be a crucial period as the government is yet to give a mandate to the duty drawback committee on the revised duty drawback rate and Rebate of State Levies (ROSL).

The government had extended this benefit up to the end of this month. As only a fortnight is left, uncertainty persists in the rates of benefits and export bookings are getting delayed.

P Nataraj has appealed to expedite clearing of all pending export benefits as it is causing severe financial stress to the exporters.

He also highlighted some of the major problems and ill-effects due to certain GST anomalies and appealed to the GST Council to sort out the anomalies of refunding the accumulated Input Tax Credit at any stage of the manufacturing process, especially processed fabrics and reduce the GST on MMF spun yarn (including filament sewing threads) from 18 percent to 12 percent.

The decentralised weaving sector believed that the fabric would be exempt from GST and suspended the purchases. The powerloom sector and the independent weaving units that produce over 95 per cent of the woven fabric is burdened with 18 per cent GST on yarn, while the vertically integrated units have no such problem as they need to pay 18 per cent GST for fibres and 5 per cent GST on fabrics. (The cost difference works out to 5 to 7 per cent).

The association has also appealed for refund of the accumulated input tax credit at the fabric stage (as fabric has been singled out, cannot take Input Tax Credit) to avoid cost escalation.