Apparel Exporters Seek Pre-GST Drawback as Immediate Relief

New Delhi: Apparel exporters on Wednesday demanded that the duty reimbursement to garment exporters be retained at pre-GST drawback rate of 7.5 per cent as an immediate relief to them amid declining outbound shipments.

India's apparel exports declined 39 per cent in value terms in October. Under drawback, exporters get the reimbursement of duties they have paid on the imported items used in the finished good.

In the wake of dwindling apparel exports, AEPC in a statement said that it has been engaging with the policy makers for an early resolution of the issue which is hampering the apparel industry, post GST roll out.

Chairman of Apparel Exports Promotion Council (AEPC) Ashok Rajani on Wednesday called on Chief Economic Advisor Arvind Subramanian to apprise him about the difficulties faced by garment exporters.

The apparel export industry has been "severely handicapped" by the sharp reductions in the effective drawback and rebate on state levies (RoSL) rates. The drawback mechanism prior to the GST reimbursed both the customs duties and domestic taxes like central excise and service tax.

"The important point is the principle of reimbursement of domestic non-GST and GST central taxes in addition to customs through the drawback mechanism," he said.

This, however requires an amendment in the drawback rules to provide for reimbursement of GST duties.

"We therefore urged Subramanian that pending these legislative changes, the total duty reimbursements to the apparel sector be retained at pre-GST stage of 7.5 per cent drawback without input tax credits, plus 3.5 per cent of RoSL (rebate on state levies)," Rajani said.

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

AEPC is the official body of apparel exporters in India that provides invaluable assistance to Indian exporters as well as importers/ international buyers who choose India as their preferred sourcing destination for garments.