Cabinet clears plan for rebate of embedded taxes in textile sector

New Delhi, March 7 (IANS) Aiming to boost the textile sector and make it globally competitive, the Cabinet on Thursday approved a scheme to rebate all state and Central embedded taxes on apparel and made-up textile segments making them zero-rated.

"Rebate of all embedded state and Central taxes/levies for apparel and made-ups segments would make exports zero-rated, thereby boosting India's competitiveness in export markets," the Ministry of Textiles said in a statement.

At present, apparel and made-ups segments are supported under the scheme for Rebate of State Levies (RoSL). However, certain state as well as Central taxes continued to be present in the cost of exports.

The decision will enable the government to take measures for making exports of apparel and made-ups zero rated. It is expected to make the textile sector competitive and will ensure equitable and inclusive growth of textile and apparel sector.

"Rebate of taxes/levies has been permitted through an IT-driven scrip system at notified rates," it added.

The Cabinet decision provides for a scheme to rebate all embedded levies for apparel and made-ups which have a combined share of around 56 per cent in India's textile export basket.

"The decision which also extends rebate up to March 31, 2020 will greatly benefit apparel and made-ups manufacturers and exporters," Textiles Minister Smriti Irani said in a tweet.

"Apparel and made-ups have combined share of 55 per cent (around $21 billion) in the total Indian textile export basket. Decision to enhance rebate will have a direct impact on these segments thereby increasing competitiveness of India's textile exports globally," she said.

Hailing the government scheme to reimburse state and Central embedded taxes to textiles industry, the Confederation of Indian Industry (CII) said it will make it competitive, increase exports and local employment.