A year back garment exporters in Tirupur opted for Rebate on State Levies (ROSL) over value added tax refunds. They are still waiting for disbursals under ROSL and are now facing a deep liquidity crisis.

ROSL was expected to incentivise exports with many levies which otherwise were not covered by the VAT refund. Exporters moved over to ROSL on being informed that three per cent to 3.9 per cent of freight on board value of exports would be reimbursed within a fortnight. At that time, the VAT refund was a cumbersome process.

As of now, disbursals pending for exporters spread over the Tirupur knitwear cluster have gone up to nearly Rs 730 crores. Owners of the medium and small scale segment exporting units in the cluster are feeling the heat as they have to find the liquidity to disburse salaries and meet working capital requirements. With the festival bonus to be distributed shortly, the crisis could worsen if the pendency were not addressed. One small scale exporter’s ROSL arrears stand at Rs 60 lakh.

Rebate on State Levies was announced with much fanfare and promises last year to incentivise exports with many levies which otherwise were not covered by VAT.