AEPC urges Govt to retain drawback at pre-GST stage

The Dollar Business Bureau

Amid declining exports, apparel exporters body Apparel Exports Promotion Council (AEPC) urged the Government to keep the total duty reimbursements to the apparel sector be retained at pre-GST stage of 7.5% drawback without input tax credits, in addition to 3.5% of RoSL.

India’s apparel exports has recorded a decline of 39%, in dollar terms, for the month of October. Overall, there has been a decline of 5.94% in the outbound shipments of apparels, according to the data released by the Government.

“AEPC has indicated earlier about the decline in exports in the coming days on account of the issues which have arose after the implementation of GST,” the exporters’ body said in a statement.

“In the wake of dwindling apparel exports, AEPC has been engaging with the policy makers for an early resolution of the issue which is hampering the apparel industry, post GST roll out,” it added.

In order to express concerns on declining exports, a delegation from AEPC, headed by its Chairman Ashok G Rajani, met Chief Economic Advisor (CEA) Dr. Arvind Subramanian on Wednesday.

In the meeting, Rajani informed the CEA about dwindling apparel exports. During the period July-October, the overall exports dropped by 6%, mainly on account of steep reductions in the effective drawback and RoSL rates.

On his meeting with Subramanian, Rajani said, “The apparel export industry has been severely handicapped by the sharp reductions in the effective drawback and RoSL rates.”

Prior to the GST regime, under the drawback mechanism, the customs duties as well as domestic taxes such as central excise and service tax were reimbursed. However, after the implementation of GST, only customs duties are being reimbursed, he said.

“For other duties, the argument that is advanced is that those duties would be available as part of the credit chain,” he added.

Rajani further said the major point is the principle of reimbursement of domestic non-GST and GST central taxes in addition to customs through the drawback mechanism. This requires an amendment in the drawback rules to provide for reimbursement of GST duties.

“We therefore urged Dr. Subramanian that pending these legislative changes, the total duty reimbursements to the apparel sector be retained at pre-GST stage of 7.5% drawback without input tax credits, plus 3.5% of RoSL,” he said.

“These pre-existing levels of reimbursement through the drawback and the RoSL routes may be maintained upto March 31, 2018 to provide immediate relief to the reeling apparel sector,” he added.