Govt doles out higher incentives for garments, made-up exports

NEW DELHI: The government doubled the incentive for exporters of garments and made-ups under the Merchandise Export from India Scheme (MEIS) to support declining textile exports.

Under the programme, exporters are given duty exemption scrips that are pegged at a certain percentage of total value of their exports. These scrips can be used to pay duties on inputs including customs. Incentive rates for the two sectors have been enhanced to 4% of value of exports from 2% with effect from November 1to June 30, 2018.

“The estimated annual incentives will be Rs 1,143.15 crore for 2017-18 and.`685.89 crore for 2018-19,” the commerce ministry said in a statement.


“This measure will incentivise the exports of labour intensive sectors of readymade garments and made ups and contribute to employ.”

The measure comes amid a sharp fall in the export of labour-intensive sectors such as textiles, leather, gems and jewellery, handicrafts, readymade garments and carpets among others.

India’s exports declined 1.12% in October to $23 billion with most traditional exporting sectors contributing to the fall. Garment exports from India fell 39.2% in October to $829.4 million following the rollout of the goods and services tax (GST) on July 1.

The made-ups sector, which includes products such as towels and bedsheets, is the second-largest employer in the textile sector after apparel. The cabinet last year approved a set of reforms including simplified labour laws and technology upgradation for the sector besides a Rs 6,000 crore package for employment generation and promotion of textile exports.

Federation of Indian Export Organisations president Ganesh Kumar Gupta asked commerce minister Suresh Prabhu to extend the MEIS benefits to other export sectors as well on Friday. The textile industry said the move would only offer interim relief.

“We need and expect much more relief because after GST, our incentives have declined,” said Sanjay Jain, chairman, Confederation of Indian Textile Industry (CITI).

In the pre-GST regime, cotton garments enjoyed a 12% incentive on duty drawback and rebate on certain state levies known as Remission of State Levies (ROSL). But this has been slashed to 2% on duty drawback and 0.39% on ROSL.

Apart from GST, Indian textile exports have lost out to other developing and least developed countries like Bangladesh and Pakistan which enjoy special duty benefits on shipments to the European Union.