New Delhi. 14th September 2022: Shri Naren Goenka, Chairman AEPC, in the first meeting of the newly constituted Board of Trade, which was Chaired by the Union Minister of Commerce and Industry, Shri Piyush Goyal, pitched for PLI-2, extension of ATUFS., raw material security, advance authorization on Self declaration basis and deletion of condition of making transferee liable and making this applicable to existing scrips under the RoSCTL for garment exports in BOT meeting, held yesterday. There were 29 new non-official members who were also invited for the first time in this Board of Trade meeting.
Chairman AEPC, Shri Goenka said, “In spite of various constraints faced by the apparel sector last year, specifically the increase in price of raw material, the apparel sector was able to export of US$ 16.01 billion in 2021-22 registering a growth of 30.4%. In this year also, from April – August 2022-23, apparel exports registered US$ 7501.06 million of exports compared to April – August 2021-22, which was US$ 6034.0 million, registering a growth of 17.8%.” AEPC is sincerely grateful to the Government of India for providing continuous support to the Apparel export sector, he added.
Further Chairman stated, “AEPC feels that with the Government intervention on regulating export of raw cotton/cotton yarn appropriately and thereby ensuring continuous availability of raw material at the competitive price, Industry will be able to achieve the export target of US$ 17.2 billion for the year 2022-23, in spite of the recessionary trend being felt in most of the garment importing countries. In our meetings with International Buyers, they have been emphasizing on the need for availability of raw-material at competitive prices and to avoid fluctuations, so that our prices with the international buyers also do not fluctuate.”
On the steps needed to be taken to improve export performance, AEPC requests that following steps need to be taken to improve export performance:
Need for Stabilizing raw material prices and ensuring sustainable availability
There is a continuous increase in the raw cotton prices. Jan 2022 raw cotton prices which were around 127cents/lb increased to as high as 155.8 and 164.6 by the end of May this year.
This rise in prices of cotton is further expected to rise considering the global shortage of cotton. An estimated 40-45% of Pakistan’s cotton crop (which is 5th largest cotton produce) has been ravished by storms and floods. The heavy drought has affected America’s cotton business. Brazil, another one of the largest exporters, is battling extreme heat and drought that has already reduced yields by nearly 30%. The drought there has already reduced the cotton supply by an estimated 200,000 metric tons. The U.S. ban on China’s Xinjiang cotton has already disrupted supply chains across the globe.
Request for Production Linked Incentive Scheme (PLI- 2) for the Apparel Sector
The Production Linked Incentive (PLI) scheme for the apparel sector is helpful in reducing dependency on imported fabrics over time and increasing investment and employment. However, the present PLI Scheme has not received many applications from the apparel sector as the requirement of minimum investment of Rs. 100 cr. Or Rs. 300 cr. was very high. Capacity development in the apparel sector is the need of hour. Hence, AEPC had suggested that PLI – 2 should be brought out for the apparel sector.
Amendment in Paragraph 4.04A (i) of FTP for allowing Special Advance Authorization for exports of Apparels under Self Declaration basis:
AEPC requests that paragraph 4.04A (i) of FTP, which allows Special Advance Authorization based on SION OR prior fixation of norms by the Norms Committee, may be amended to allow Special Advance Authorization on Self-declaration basis as well. This facility is already provided to other Advance Authorizations in Para 4.07 of Handbook of Procedures. This will help in avoiding delay in issuance of Special Advance Authorizations. In any case, even when the Special Advance Authorization is issued based on Self-declaration basis, the norms will have to be approved by the SION Committee subsequently.
Request for Extension of ATUFS
The Technology Upgradation Fund Scheme (TUFS) announced in 1999, has been helpful in the modernization and technology upgradation of the textile industry in the country. Since the ATUF expired on 31st March 2022 and the TTDS scheme has still not been notified, AEPC requested for the extension of ATUFS applicable from 1st April 2022, so that there is no black out period.
Request for deletion of provision of making the transferee liable from the RoSCTL conditions
Even though the RoSCTL also aimed to reimburse the taxes paid by the exporters to the Central or State Governments, under RoSCTL the rebate was not directly transferred to the exporters in cash, but this was granted to exporters of Garments and Made-ups in the form of freely transferable duty credit scrips. Exporters can either use these scrips to pay Basic Custom Duty (BCD), on their own imports or they can sell the duty credit scrips to other importers. RoSCTL scrip has limited usage as it could be used only for payment of BCD.
In September 2021, an additional condition was notified for the RoSCTL Scheme that allowed the Customs Authorities to recover from the subsequent buyers of the scrip (transferees) amounts due for the non-realization of the sales proceeds by the exporters to whom the scrip was originally issued. This has resulted in the exporters selling these scrips in the open market at discounts, extending up to 20%.
AEPC has been requesting repeatedly that the transferee clause as given in the Notification No. 77/2021 dated 24.09.2021 of DoR, making transferee liable in the case of non-realization of the exporter proceeds should be deleted. We also request that the condition should even be deleted for existing scrolls/scrips.
