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( 12 Jul 2019)
GST effect on Textile sector

Apparel (in pairs) export has shown an increase of 16 per cent from 116 million units in 2016-17 to 157 million units in 2018-19. Export of total textiles and clothing has shown an increase of 2.7 per cent from 35,666 US million dollars in 2017-18 to 36, 627 US million dollars in 2018-19.

Indian Government has been taking multi-pronged efforts through various schemes/programmes for expansion of textile manufacturing, infrastructure development, upgradation of technology, supporting innovation, enhancing skills and traditional strengths in the textile sector that lead to improvement in textile sector in the country including in Tiruppur. The schemes and programmes include:

Further, a separate scheme for development of Knitting and Knitwear Sector was launched in January 2019 with an outlay of Rs.47.72 crore for a period up to 31.3.2020to boost production in knitting and knitwear clusters at Ludhiana, Kolkata and Tiruppur.

Indian Government launched a Special Package of Rs. 6000 crore in 2016 for garments and made-ups sectors. The package offers Rebate of State Levies (RoSL), labour law reforms, additional incentives under Amended Technology Upgradation Fund Scheme ATUFS and relaxation of Section 80JJAA of Income Tax Act.

RoSL scheme has been replaced by the new RoSCTL (Rebate of State and Central Taxes and Levies) scheme from March 07, 2019 and shall remain in force up to 31.03.2020. The rates under Merchandise Exports from India Scheme (MEIS) have been enhanced from 2 per cent to 4 per cent for garment and made-ups, 5 per cent to 7 per cent for handloom and handicrafts w.e.f. November 01, 2017.

The products such as fibre, yarn and fabric in the textile value chain are being strengthened and made competitive through various schemes, inter alia, Powertex for fabric segment, ATUFS for all segments except spinning, Scheme for Integrated Textile Parks (SITP) for all segments, etc. Assistance is also provided to exporters under Market Access Initiative (MAI) Scheme. Government has enhanced interest equalization rate for pre and post shipment credit for exports done by MSMEs of textile sector from 3 per cent to 5 per cent from 02.11.2018. Benefit of Interest Equalization Scheme has been extended to merchant exporters from 02.01.2019 which was earlier limited to only manufacturer exporters.

As per the press report, Amended Technology Upgradation Fund Scheme is being implemented to upgrade technology/machinaries of textile industry with an outlay of Rs. 17,822crore during 2016-2022 which will attract investment of Rs.1 lakh crore and generate employment in the textile sector by 2022.

As per the Scheme of Integrated Textile Park (SITP), Government provides 40% subsidy with a ceiling of Rs.40 crore to set up Textile Parks for infrastructure creation and employment generation.

Being a part of Government’s focus on skill development and employment generation in the textile sector, Government is implementing the ‘Samarth – Scheme for Capacity Building’, to train 10 lakh youth for a period of three years from 2017-18 to 2019-20, at an estimated cost of Rs.1300 crore.

Other than the aforesaid programmes, Government has been implementing various schemes for promoting investment, production, employment generation and for boosting exports in the textile sector. These include PowerTex India Scheme - for Powerloom Sector Development, Silk Samagra- the integrated silk development scheme, Integrated Processing Development Scheme (IPDS), North Eastern Region Textile Promotion Scheme (NERTPS), Incentive Scheme for Acquisition of Plants and Machinery (ISAPM) for Jute Industry and Jute Diversified Products Manufacturing Units, NHDS for handloom and handicraft sectors, etc.