Garment and made-up exporters in India have yet to avail of benefits under the Merchandise Export from India Scheme (MEIS) and the Rebate of State and Central Taxes and Levies (RoSCTL).
The RoSCTL is aimed at keeping exports zero-rated, as per best international practices, while the MEIS is intended to help exporters deal with several infrastructural bottlenecks, including exorbitantly high logistics costs. While MEIS gains have been held up since August, benefits under the RoSCTL have never been extended since its introduction in March. This has exacerbated a liquidity squeeze for exporters, who typically factor in such incentives while firming up deals. Their ability to honor fresh contracts on time ahead of Christmas has been impaired. This is the most critical season for western apparel buyers.
Benefits worth Rs 5,000 crores are stuck under the schemes at a time when the flow of bank credit remains muted and exports have dropped for months. Overall exports have contracted for four months in a row through November. Most of the country’s garment exporters are small and medium units, with very limited ability to raise resources. They fear that unless the issue gets resolved expeditiously their business will go to new competitors like Vietnam, Cambodia and Poland.