Apparel and made-ups exporters in India are facing an acute liquidity problem. Huge amounts of their funds are blocked under a rebate scheme for state levies and an export incentive program. Most apparel exporters are from the MSME sector and some of them are already in the process of closure and default.
Around Rs 6,000 crores of duty refund claims have not been disbursed under the Rebate of State and Central Taxes and Levies (RoSCTL) and the Merchandise Export from India Scheme (MEIS). Many exporters have paid statutory taxes also on RoSCTL and MEIS benefits. MEIS was also stopped from August last year for the apparel and made-ups sectors. Apparels and made-ups is one of the largest employment generation industry particularly supporting women.
India is already fast losing business to other countries like Vietnam, Cambodia, Myanmar, Bangladesh. India’s textile and apparel exports fell by eight per cent from April to November 2019. Exports were severely affected by the trade conflict of the US with China, the EU’s struggle with Brexit, growing geopolitical tensions in the Middle East and the removal of GSP benefits to India by the US. Under GSP, developed countries grant import duty concessions, in addition to prioritising purchase of textile and apparel products from some countries.