A high level delegation of Apparel Export Promotion Council (AEPC) led by
its Vice Chairman HKL Magu met Commerce minister Suresh Prabhu and apprised
him about the major constraints being faced by the apparel exporters towards
increasing exports from India.
The Council members took up with the Minister about the issue of
non-reimbursement of embedded taxes under Rebate of State Levies (ROSL),
Drawback (DBK) scheme which is making the apparel industry non-competitive in
the international market. The council also informed the minister about the
impact of overvalued Rupee on the Export Growth.
Exchange rate is an important competitive tool and the Council cited the
issue of depreciation in the value of currencies of the neighboring countries
like China, Bangladesh and Vietnam during the last six months which made their
goods more competitive than Indian products in the overseas markets.
A strong rupee has significantly diluted the impact of the Special package
of Rs. 6000 crores for apparel industry and in order to encourage exports, it
is necessary that rupee is depreciated in a calibrated manner to a level where
India’s exports become competitive in the global market, urged the AEPC
delegation during its meeting with the minister.
Talking to newsmen after meeting the Minister Mr. Ashok G Rajani, Chairman
Apparel Export Promotion Council said, “The principle of zero-rating of exports
is uniformly followed by all countries across the world.
However, such zero-rating of exports, as prescribed in the GST law, will
not be complete and will be limited to refunding of input taxes as there are a
number of GST taxes, which are invisible
and embedded in the FOB value of exports, given the design of the Indian GST.
Therefore, it is important that the refund of the blocked GST taxes should
not be seen as an incentive, but as an enabler of trade neutrality. The
minister has assured us every best possible support for the smooth growth of
industry and we are hopeful that he will look into the concerns raised by the
In its meeting with the Commerce minister, the council members made
suggestions about the Export policy. The council has suggested that the export
policy should address the aspects of market disabilities and policy
While the market disabilities for the apparel industry in India include the
issues related to logistics cost and time, rigid labour regulations, lack of
economies of scale and discrimination in export markets arising out of
preferential trade agreements for competing countries in major markets such as
the US and EU, the policy disabilities include tax and tariff policy which
plays a major role in export performance.
The council in its meeting informed the Minister that while the government
uses various ways and means to neutralize market based disabilities, the duty
drawback facility is usually used to neutralize any tax and tariff
The members further suggested that for ensuring taxes are not exported, a
system of Central and State drawback should be envisaged for the post-GST
In central drawback system, embedded CGST taxes in the exempt/ excluded
sectors, basic customs duties and Central excise duties on specified petroleum
products should be included while in the state drawback system, embedded SGST
taxes in the exempt/ excluded sectors, State VAT on specified petroleum
products, electricity duties, stamp duties and registration charges, motor
vehicle taxes,mandi taxes, green taxes, property taxes etc., should be
The Apparel Export Promotion Council (AEPC), Incorporated in 1978, AEPC is
the official body of apparel exporters in India that provides assistance to
Indian exporters as well as importers/ international buyers who choose India as
their preferred sourcing destination for garments.
In recent years AEPC has worked in integrating the entire industry -
starting at the grass root level of training the workforce and supplying a
steady stream of man power to the industry; identifying the best countries to
source machinery and other infrastructure and brokering several path breaking
deals for its members.
It helped exporters to showcase their best at home fairs as well as be
highly visible at international fairs the world over. With AEPC's expertise and
all the advantages that India has, it makes for a truly win-win situation -
Indian exporters grow stronger each year in their achievements, skills and
proficiency, while international buyers get superior solutions for their garment