After endless calls from different industrial sectors, last week the government announced the increase of duty drawback charges to become effective from 25th of January, 2018. The increase of charges for about 102 items is looked upon as a relief for all the firms dealing with those. However, some representatives of the textile industry have approached the government to get their disappointment registered for getting few of the most important calls ignored.
The notification mentions about only woolen items which forms an insignificant portion of the textile industry. Nothing as such is there on textiles. In fact this industry is quite disappointed that its demands for raising ROSL for garments and yarn fabric wasn’t considered even though the industry is undergoing a difficult state after the initiation of GST, as stated by Sanjay K Jain, the president of Confederation of Indian Textile Industry- CITI.
According to representatives of the domestic textile industry, it is flooded by the imported materials and this has turned out being a major concern for all the SMEs functioning in this sector. In the words of Sinha, export incentives as well as import barriers went down abruptly and this in turn has increased imports by 20 percent. In certain cases like that of Bangladesh, an increase of 50% has been noted in terms of garments. It has been estimated that exports are going down each month.
The GST rate applicable on fabric is just 5 percent as stated officially. However the non refund policy applicable on excess input tax credit within the inverted duty structure ends up making it about 8 to 9%. And this in turn is resulting into the loss of imports since they pay just 5% GST, as stated by Jain. He also asserted that this affected the SMEs within the textile industry.