‘No clarity on duty drawback rate, Rebate of State Levies’

The second half of September could be a crucial period for the textile industry 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) on export of garments and made-up textile articles.

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. We are unable to book orders due to lack of clarity on the duty drawback rate, and this could impact India’s textile exports,” said P Nataraj, Chairman, the Southern India Mills Association (SIMA).

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

“We hail the government’s intervention — be it demonetisation or GST — but the fact remains that the businesses have been affected the past two-three months. The industry has just started to overcome the difficulties. Supply of fabric and yarn is tending to look up as festive season is round the corner. At such a time, if the issues are taken up on a war-footing, it would lead to more misery, troubles,” he said.

Highlighting some of the major problems and ill-effects due to certain GST anomalies, Nataraj voiced concern over the undue delay in getting clarifications including use of C forms for inter-state purchase of HSD oil under 2 per cent CST (as petroleum products have been kept out of GST), and issues relating to canteen and transport services provided by the manufacturing units to their employees through contractors or at concessional rate. “The local tax authorities only forward the issues to the GST Council for clarification instead of providing instant service then and there.”

The association has 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.

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 SIMA chief has 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 per cent to 12 per cent.

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