Apparel exporters led by the Apparel Exports Promotion Council (AEPC) have demanded that duty reimbursement to apparel exporters be retained at the pre-GST drawback rate of 7.5 per cent as an immediate relief to them amid declining outbound shipments.
Incidentally, India's apparel exports have declined by 39 per cent in October 2017.
Under drawback, exporters get reimbursement of duties they paid on imported items which are used as inputs in finished goods.
However, in the wake of dwindling apparel exports, an AEPC statement said that AEPC Chairman Ashok Rajani called on Chief Economic Advisor Arvind Subramanian recently, to apprise him about difficulties being faced by apparel exporters.
According to the AEPC statement, the Indian apparel export industry has been “severely handicapped” by sharp reductions in effective drawback and rebate on state levies (RoSL) rates. In fact, before GST was introduced, the drawback mechanism used to reimburse both customs duties and domestic taxes like central excise and service tax.
The statement has quoted Rajani saying that the important point is the principle of reimbursement of domestic non-GST and GST central taxes in addition to customs through the drawback mechanism. This would require an amendment of present drawback rules to provide for reimbursement of GST duties, he stated.
Rajani urged Subramanian that pending these legislative changes, total duty reimbursements to the apparel sector should be retained at the pre-GST level of 7.5 per cent drawback without input tax credits, plus 3.5 per cent of rebate on state levies (RoSL).
He made a request that pre-existing levels of reimbursement through drawback and RoSL routes should be maintained until March 31, 2018, in order to provide immediate relief to the suffering apparel sector.