The government’s current stand on GST and duty drawbacks drew sharp reactions from garment exporters pan India. They demanded an urgent revert to duty drawback and Remission of State Levies (ROSL) rates that prevailed in the pre-GST regime.
The exporters warned that the garment export sector would lose close to six million jobs if the government at the centre failed to address their grievance and remedy the situation. To make matters worse, garment exporters from India are facing fierce competition from the neighboring nations of Pakistan and Bangladesh besides Vietnam and risk losing out on valuable business.
The exporters pointed out that on an average they used to receive duty drawback to the tune of 11.5 percent in the pre-GST regime and also an average RoSL of 3.5 percent. In sharp contrast, in the post-GST regime, our duty drawback has dipped to 2.25 percent, they lamented.
Even the increase in RoSL from 0.39 percent to 1.7 percent that the government effectuated in the previous week, was greeted with a lukewarm enthusiasm. The garment exporters pointed out that this is well below the 3.7 percent they were receiving earlier.
Expressing their grievances at a press conference, the garment exporters said, “We are facing untold hardships because of the government’s inability to implement GST seamlessly and efficiently. We find it very tough to do business with our existing clients. Still worse, we incur additional compliance costs. In short the GST implementation is abjectly lacking in thought.”
The Apparel Exporters and Manufacturers’ Association, informed the press, “There was a steep dip of 41 percent in garment exports in the month of October alone. A further 30 percent decline is expected in November. In the season that lasted between April and October this year, the decline was 5.8 percent. If the situation is not remedied quickly, the trend is bound to continue and would result in an overall decline of 15 to 20 percent for the entire fiscal year.”
The exporters cited figures stating October registered the sharpest dip and the figures stood at USD 829.44 million dollars. They further said, “We are currently employing 12.9 million people directly and about 50 percent of this workforce would lose their livelihood.”
On the sidelines, they also voiced their concerns about the other expectations they had from the government. “We want the free trade agreement with Europe to be quickly in place. This way our country can regain its export competitiveness. Currently, the industry has to pay a whopping 9.8 percent duty for shipping to Europe.
The garment exporters also expressed concerned over lack of clarity on the proposed e-wallet system that will be in place by April 2018. Summing it up, they pleaded for complete refund of all blocked taxes and fabric inputs compounded by lower GST rates.