India may extend the rebate scheme to other textile categories like yarn and fiber. As of now the scheme to rebate embedded central and state levies is confined to the garment and made-up sectors. The decision may be taken in the light of the urgency to do away with the popular merchandise export incentive scheme (MEIS), which is against World Trade Organization rules. MEIS which offers incentives based on the markets the goods are being exported to has to be withdrawn as Indian textiles have graduated out of the group of items allowed export sops at the WTO.

The embedded taxes include central excise duty on fuel used in transportation, embedded CGST paid on inputs such as pesticides and fertilisers used in production of raw cotton, purchases from unregistered dealers, inputs for transport sector and embedded CGST and compensation cess on coal used in the production of electricity. Also funds for exporters under the Technology Upgradation Fund Scheme (TUFS) will be cleared. GST issues on textiles and clothing, including inverted duty structure in the manmade fiber sector, will be addressed. The hank yarn obligation may be reduced from 30 per cent to 15 per cent.

India slipped to the fifth position among garment and textile exporters in 2018.