Apparel exporters have brought up the problems
faced by them post GST before a parliamentary panel, signalling the
"strong likelihood" of a decline in garment shipments from India and
possibility of job losses.
The Apparel Export Promotion Council (AEPC) made
a presentation to the Parliamentary Standing Committee (Rajya Sabha) on
Commerce chaired by Naresh Gujral earlier this week.
The body pressed for early consideration of tax
refunds blocked on the purchase of ginned cotton (agricultural inputs such as
agricultural machinery, seeds, fertilisers, power, diesel and the like) and
miscellaneous central or state levies like power cross subsidy, stamp duty,
property tax and other levies for refund under Rebate of State Levies.
The council also drew the attention of the Committee
members to the issue of extension of exemption of IGST on import under EPCG
(Export Promotion Capital Goods) or Advance Authorisation from March 31, 2018
to December 31, 2018, in order to provide a longer window for investment
It also asked for allowing utilisation of MEIS
(Merchandise Exports from India Scheme) scrips for use in payment of CGST, SGST
and IGST to ease the challenges of working capital blockage and other
To arrest the decline in exports, the AEPC
suggested that the competitive exchange rate and rupee appreciation be stabilized
to protect the interest of exporters.
"The positive impact of GST is yet to be
felt by garment industry where input costs have not come down. Overall effect
of GST on apparel exporters, especially small and medium exporters, is
burdensome and stressful due to substantial increase of working capital and
higher transaction cost," AEPC Chairman Ashok Rajani said. "It has
not only impacted the production of apparel adversely, but has also led to
pressure on margins for exporters due to lowering of drawback rates."
The Council, according to him, has informed the
parliamentary panel that under the prevailing circumstances, there is a strong
likelihood of exports from India dipping in the near future, as the global
garment industry is very competitive.
"Further, competing countries like Bangladesh and
Vietnam have cost advantages on account of preferential trade agreements with
major export markets, and buyers are moving to these destinations for sourcing.
This could have a cascading effect on the job scenario as exporters will be
forced to shed jobs," Rajani added.