New sops to tackle falling yarn exports
In order to arrest the situation of 35% dip in cotton yarn exports in the first quarter of FY20, the government has set up an inter-ministerial committee of secretaries. According to reports, exports of cotton yarn and fabrics dropped by 9.98% and 10.54%, respectively in July.
This move follows the decision of the Prime Minister’s Office to review the Rebate of State and Central Taxes and Levies (RoSCTL) scheme and the textile industry’s demand to extend the scheme’s benefits to other segments of the textile value chain. RoSCTL was designed to allow reimbursement of duties on export inputs and indirect taxes through freely transferrable scrips (incentives that can be used to pay duties). “Among textiles, cotton and viscose yarn are suffering. Cotton yarn exports attract 5-6% of embedded taxes, which are not refunded to the exporters at any stage,” said an industry insider. Further, India’s textile and apparel trade gap with China due to the stiff competition that it faces from cheaper cotton yarn from Vietnam and Pakistan.