The Government has given the exporters reason for cheer as they are set for reimbursement of taxes paid by them under various drawback schemes. This move has been aimed at remedying hitches which have arisen since Goods and Services Tax (GST) implementation earlier this year.
The exporters have been severely hit by the new duty drawback rates that have affected their competitiveness already afflicted by lack of timely refunds causing increased working capital requirements. This has led to widespread loss of jobs in the textiles and leather sectors.
The government has gone ahead and decided to revise drawback rates after textiles and commerce ministries took up the issue with finance ministry. It is expected a decision could be announced as early as next week.
The duty drawback rates refund of state levies (ROSL) would drop from the present 11-13% to 8-9% for cotton and viscose textiles.
“A lot of exporters had contracted based on earlier rates. Because of GST has come down drastically, many of them are complaining about loss of competitiveness affecting them as the orders placed in May or June will see supplies till December-January. As a result we have sought restoration of drawback. Plus, the problem with GST refunds is persisting and a restoration of the rates will reduce the pressure on GST refunds,” said Ajay Sahai, director general of the Federation of Indian Export Organizations (FIEO).