GST on cotton is 5% across the entire textiles value chain whereas GST rates on manmade fibres (MMF) and textiles are 18%, 12%, and 5% on fibre, filament yarn/ spun yarn and fabrics respectively. The matter of implementation of a uniform tax structure for the MMF value chain (from feedstock to fabric) was already referred to Ministry of Finance to correct inversion in duty structures. Rationalization of GST on MMF value chain will help to boost growth of the MMF sector.
To boost exports in textile sector including cotton clothing, Government has introduced the new RoSCTL (Rebate of State and Central Taxes and Levies) scheme from 7th March 2019. Government has also notified a special one-time additional ad-hoc incentive of upto 1% of FoB value to be provided for exports of apparel and made-ups to offset the difference between RoSCTL and RoSL + MEIS at the rate of 4%, from 7.3.2019 to 31.12.2019.
To boost exports in MMF sector, Government has also removed anti-dumping duty on PTA, a key raw material for the manufacture of MMF fibre and yarn. Exporters are also provided assistance under Market Access Initiative (MAI) Scheme. Interest equalization rate for pre and post shipment credit for exports by MSMEs of textile sector has been enhanced from 3% to 5% from 2.11.2018.
Benefits of Interest Equalization Scheme has been extended to merchant exporters from 2.1.2019 which was earlier limited to only manufacturer exporters.
This information was given by the Minister of Textiles, Smriti Zubin Irani, in a written reply in the Lok Sabha today.
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