- 17 Jun 2022
- ICICIdirect Research
Steep discount on RoSCTL scrips negatively impacting competitiveness of Indian apparel exporters
News: As per media reports, Garment exporters have appealed to the Union Government to provide benefits under the Rebate of State and Central Taxes and Levies (RoSCTL) in cash directly to the exporters and not as scrips.
Views: RoSCTL scheme provides rebate against the taxes and other levies that are already paid by the exporters on the inputs. These rebate is converted into scrips that are tradable. Exporters can sell scrips to the importers and importers, in turn, can pay import duty with these purchased scrips as an alternative to cash import duty payments. Earlier the importers used to buy these scrips at a marginal discount of 3-4%, however currently owing to low demand for these scrips exporters have to sell these scrips at a discount of around 20%. Indian apparel exporters are likely to lose around ₹ 1500 crore if the current situation prevails. The competitiveness of Indian apparel exporters is expected to be negatively impacted if the imbalances in the RoSCTL scheme are not addressed on priority basis. If the government does not make amendments to the RoSCTL structure then the apparel export industry may lose its competitive edge due to cost inefficiencies compared to other garment exporting countries like Bangladesh , Pakistan and Vietnam.