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Rebate scheme backlog hits Rs 16 billion

The textile industry says around Rs 16 billion worth of payments to readymade garments alone, under the Remission of State Levies (ROSL) scheme, has not been cleared by the government.

The government had allocated Rs 4 billion in 2016-17. The original allocation under ROSL of Rs 15.55 billion for 2017-18 was enhanced to Rs 18.55 billion in the revised estimates. For the year 2018-19, the ROSL allocation in the Union Budget was Rs 21.64 billion. The amount allocated would not be sufficient for the requirements even at present. Besides, there has been a delay in payment; the ROSL amount was given to exporters only from March 2017 onwards.

The amount allocated might not be enough to serve the current requirements, so the government needs to increase the allocation and disburse funds as early as possible to help the industry come out of its present financial crunch, said the organisation.

The rebate of state levies shall be understood to comprise value-added tax (VAT) on fuel used in the transport of raw materials, finished goods and factory workers, and VAT on fuel used in generation of captive power, Mandi tax on purchase of cotton, duty on electricity used in manufacture as accumulated from stage of cotton and man-made Fibre (MMF) till garment or made-up stage, stamp duties on export documents and state GST on inputs used in the production of cotton, and embedded SGST in purchases from unregistered dealers.

The ROSL scheme was announced as part of a special package to the apparel sector, and, subsequently, made-ups were also included in the scheme. The scheme came into effect from September 20, 2016.