Textile exporters bleed as Govt asks them to repay sops availed

Suresh P Iyengar Mumbai | Updated on January 30, 2020 Published on January 30, 2020

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The Union government has put scores of small textile exporting companies on the verge of closure by withdrawing export concessions with retrospective effect.

In a recent notification, the Government has not only announced that it will withdraw the benefit of 4 per cent MEIS (merchandise export incentive scheme) on exports of made-ups and garments with retrospective effect from March, but also recover MEIS incentive given till July.

To top it all, the government has not yet implemented the scheme to reimburse taxes on exports under RoSCTL (Rebate on State and Central taxes and levies) scheme announced last March.

Maulik Modi, promoter of Kewal Implex told BusinessLine, that he has been in business for last 20 years and has never heard of something like a Government asking exporters repay the incentives they have availed.

“In October, we had booked export orders worth ₹4.5 crore pricing in the 12 per cent incentive, and these commitments need to be met till March. Just because the government has withdrawn the incentives, we cannot renegotiate the price now. Buyers will laugh at Indian government,” said Modi, who exports various kinds of towels across the world.

Dire situation

The textile export industry, which operates on a 4 per cent margin, is on the verge of collapse after the withdrawal of the 12 per cent concession. Sensing trouble, risk averse banks have already started cutting down their exposure to textile exporters, exerting huge pressure on working capital.

If the situation continues about 50 per cent of export-oriented small textile units will shut down, leading to many job losses and casting aspersion on the Government which came to power on job creation plank, said Modi.

Early this week, the Government has announced a fresh duty draw back of 4 per cent but the industry does not want to believe the government now. “What is the guarantee that the Government will keep its words this time around. We can survive without any incentive, but do not keep tinkering with policies every now and then,” said Modi.

Published on January 30, 2020
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