The Indian textile and garment export sector is poised for a potential boost in the upcoming 2025-26 budget, with the finance ministry reportedly considering a 10% increase in allocations for key tax remission schemes. This move comes amidst industry calls for sustained support to navigate global economic headwinds and capitalize on emerging opportunities.
Sources indicate that the Remission of Duties and Taxes on Exported Products (RoDTEP) and the Rebate of State and Central Taxes and Levies (RoSCTL) schemes are in line for increased funding. The RoSCTL scheme, specifically designed for textile and garment exporters, received ₹9,246 crore in the July 2024 budget. The potential 10% increase would provide significant relief and enhance the competitiveness of Indian textile exports in the global market.
Furthermore, the expenditure department is evaluating a proposal to address a ₹1,800 crore shortfall in the RoDTEP scheme this fiscal year, highlighting the government’s commitment to supporting exporters. These schemes reimburse exporters for various state and central taxes and levies incurred on inputs used in exported products, effectively zero-rating exports as per international best practices.
The government is also exploring the extension of RoDTEP support for companies in special economic zones (SEZs) and export-oriented units, along with the interest equalisation scheme, beyond their current December 2024 deadlines. This extension would provide much-needed continuity and stability for exporters operating within these zones.
Industry bodies have been vocal in advocating for continued support, particularly in light of potential trade disruptions and slowdowns in key export markets. They emphasize the importance of bolstering exports to capitalize on opportunities arising from geopolitical shifts, such as a potential US-China trade conflict.
The Federation of Indian Export Organizations (FIEO) has identified potential export opportunities worth $25 billion to the US in various sectors, including apparel and textiles, should a trade war escalate. This underscores the potential for Indian textile exporters to gain a significant foothold in the US market with adequate government support.
The current fiscal year has seen a marginal 1.6% year-on-year increase in merchandise exports until December, reaching $322 billion. With the World Trade Organization projecting a 3% global trade volume growth in 2025 (assuming the resolution of the West Asian conflict), the proposed enhancements to export incentive schemes could provide the necessary impetus for the Indian textile sector to achieve significant growth and strengthen its global presence. The proposed increase in RoSCTL and RoDTEP funding offers a promising outlook for textile manufacturers and exporters.
