The Ministry of Finance has increased the Merchandise Exports from India scheme (MEIS) rates for readymade garments and made-ups from 2 per cent to 4 per cent for a period of 1.11.2017 to 30.6.2018 on 24th November 2017. The industry has welcomed this announcement and thanked the government for this initiative. The enhancement in MEIS rates is a big relief to the garment export sector at this hour of crisis. It will also help in the mitigation of the currency difference to some extent.
However, the industry is disappointed over the announcement of the RoSL as the rate is far below than what the industry has recommended and there has been no consideration of the central taxes rebate in the announcement at the time when the industry is witnessing a slowdown with buyers shifting due to high cost.
Moreover, the apparel industry has been one of the worst hit by the GST as it was earlier on the optional route. Also, the industry comprises largely of SMEs who are finding GST compliances and capital blockage a severe strain on their bottom lines. Today, the industry faces a double whammy of reduced drawback and RoSL rates on one hand, and unchanged fabric and input costs on the other, besides this, the hardening of the currency has eroded the industry’s competitiveness.
The industry has also requested to incorporate the embedded tax and announce the revised ROSL and Duty Drawback rates, as these lifeline supports are desperately needed to bring back the exports growth. Industry is hopeful that the government would consider these requisitions immediately.
On the other hand, industry has also hailed the mid-term review of the Foreign Trade Policy announced by the Central Government on the 6th December 2017 as a Progressive Package to address several issues relating to policy as well as procedures. Garment exports from the country have been declining steeply for several months and there are no sign of an early revival of overseas demand. In such a situation, the measures included in the review for facilitating exports and improving ease of doing business will be of great help.