Apparel Online Bangladesh Magazine April Issue 2019 | Page 48

BEYOND BD TO ADVERTISE GOING TO A GOOD EVENT? Contact Rani Mahendru [phone] (512) [email protected] Send your industry gossip, photos and news to [email protected] Good news for Indian textile and apparel industry! Government approves scheme to rebate state and central embedded taxes In a big relief to the Indian apparel industry, Union Cabinet chaired by Indian Prime Minister Narendra Modi recently approved scheme to rebate state and central embedded taxes. The main component of the decision includes increase in rebate by including both state and central levies, extension of rebate going up to 31st March 2020 and change in the disbursal mechanism of the same. The move will greatly benefit apparel and made-ups manufacturers and exporters. Rebate of state and centre levies/ taxes will be done through IT-driven Scrip System, thereby preventing delay and ensuring speedy disbursal. Garment exporters are happy with this announcement, especially with the central embedded taxes as they were struggling on this front. So far, apparel and made-ups segments are supported under the Scheme for Rebate of State Levies (RoSL). However, certain state as well as central taxes, continue to be present in the cost of exports. The decision is important as apparel and made-ups sector have a combined share of 55 per cent (around US $ 21 billion) in the total Indian textile export basket. It will have a direct impact on these segments thereby increasing competitiveness of India’s textile exports globally. The proposed measures are expected to make the textile sector competitive. Rebate of all embedded state and central taxes/ levies for apparel and made-ups segments would make exports zero-rated, thereby boosting India’s competitiveness in export markets and ensuring equitable and inclusive growth of textile and apparel sector. Garment exporters are happy with this announcement, especially with the central embedded taxes as they were struggling on this front. So far, apparel and made-ups segments are supported under the Scheme for Rebate of State Levies (RoSL). However, certain state as well as central taxes, continue to be present in the cost of exports. 48 Apparel Online Bangladesh | APRIL 2019 | www.apparelresources.com Indian apparel exporters had a logic that there are many levies outside GST that are embedded in the export prices, and so they demanded often for higher duty drawbacks and RoSL rates. Meanwhile, in another development, the Indian Government has reduced Hank Yarn Obligation (HYO) from 40 per cent to 30 per cent of the total weaving yarn produced for domestic consumption, with effect from January this year. Textile mills that pack yarn for the domestic market had to ensure that 40 per cent was in hank form. This has now been reduced to 30 per cent. HYO provision had compelled the textile mills to produce a minimum of 40 per cent of the weaving yarn for domestic consumption as hank yarn, which was inhibiting the growth of the industry. The actual cotton hank yarn requirement by the handloom sector is less than 15 per cent of the total as per the estimate based on the Handloom Census 2009-10 data. It is estimated that now the requirement for hank yarn would have fallen to about mere 10 per cent of the total weaving yarn produced for domestic consumption. Mills earlier were under severe stress to meet this obligation as there was not sufficient demand for hank yarn in the country. “Decision of reducing the hank yarn obligation (HYO) would remove the anomaly of excessive obligation of hank yarn and save the ailing spinning industry from the extra burden. It is a historical step, as the industry was facing this extra burden for more than a decade now,” stated Sanjay Kumar Jain, Chairman, CITI. “When the HYO was reduced from 50 per cent to 40 per cent during 2003, the obligatory quantity was around 930 million kgs and the same increased to over 1,600 million kgs during 2018.  On the other hand, the number of handlooms was Rs. 31.37 lakh during 1997-98 and the same got reduced to Rs. 21.46 lakh during 2009-10 handloom census. The proportionate reduction in obligation works out to less than 15 per cent and therefore, there is a room to reduce the obligation further by 10 per cent. As per the Handlooms Census 2009-10, the actual hank yarn requirement works out to less than 10 per cent,” maintained P. Nataraj, Chairman, The Southern India Mills’ Association (SIMA).