The Indian Textile Ministry under newly elected Minister, Dayanidhi Maran, is supporting the textile exporters' case for additional subsidy under present difficult trading conditions in the form of extra duty drawback and export credit subventions.
Textile exports, representing about 14% of India’s total exports, have contracted by 30% in the last year. The industry is hoping for an increase in duty drawbacks from the present 8.8% to 14% and an export credit subvention increase from 2% to 4%. The Textile Ministry wants to achieve this by including state level taxes in the Duty Drawback scheme. This is an export promotion scheme, which reimburses Customs and Excise duties to exporters so that taxes are not loaded on export prices. It will eventually be superseded through the introduction of GST (goods and services tax), which does not impose output tax on exports - much like VAT.
The textile exporters are also seeking further exemptions in respect of Income, Service and Fringe Benefit Taxes. Meetings are due to be held soon with the Finance Secretary to ascertain how much of this is achievable.
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