Government approves continuation of export incentive scheme for apparel, garment till March 2026
Cabinet approves continuation of Scheme RoSCTL:
RoSCTL: The program went live in 2020. It was previously extended through March 2024. “The Union Cabinet chaired by Prime Minister Narendra Modi approved the continuation of the scheme for RoSCTL for export of apparel/garments and made-ups up to March 31, 2026,” the ministry stated in a statement.
The extension of the Scheme for Rebate of State and Central Taxes and Levies (RoSCTL) for the export of apparel/garments and made-ups until March 31, 2026, has been approved by the Union Cabinet, which is chaired by Prime Minister Shri Narendra Modi.
The goal of this two-year extension is to create a stable regulatory environment, which is essential for strategic trade planning, particularly in the textile industry where long-term deliveries of advanced orders are typical. A stable and predictable policy environment is ensured by the continuation of RoSCTL, which also promotes fairness and lowers taxation by operating under the tenet that “goods are exported and not subject to domestic taxes.”
The Union Cabinet had previously approved the extension until March 31, 2020, with a second extension until March 31, 2024. The current extension until March 31, 2026 is anticipated to improve the export competitiveness of the apparel and made-ups industries. This modification supports the zero-rated export principle by enabling cost-competitive pricing for Made-ups and clothing/garments. Products other than textiles that fall outside the purview of RoSCTL (Chapters 61, 62, and 63) are also eligible for benefits under RoDTEP.
The scheme’s main goal is to use refunds to offset State and Central taxes, levies, and the Duty Drawback Scheme for exports of clothing and made-up items. This strategy ensures fair competition in the worldwide export market by adhering to the widely recognized idea that taxes and tariffs shouldn’t be exported. The program pays back state taxes and levies, which include VAT on several components such as fuel, electricity, and agricultural operations. On the other hand, central taxes and levies are responsible for fuel excise duty and embedded CGST paid on inputs.
In the value-added and labor-intensive sectors of the textile value chain, RoSCTL has been essential in helping Indian exports become more competitive. The objective of extending the scheme’s implementation period by two years is to provide a solid policy framework that would cater to the textile industry’s long-term trade planning requirements.
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This Cabinet decision is great news for the textiles sector, which is vital to India's economic growth. It will significantly enhance the competitiveness of Indian products and boost exports. https://t.co/Xtk44uxGIM https://t.co/g2hrjPNZ49
— Narendra Modi (@narendramodi) February 1, 2024
1.Question: Who chaired the Union Cabinet for the approval of the RoSCTL extension?
- Answer: Prime Minister Shri Narendra Modi.
2.Question: Until what date has the Scheme for Rebate of State and Central Taxes and Levies (RoSCTL) been extended?
- Answer: 31st March 2026.
3.Question: What is the proposed duration of the RoSCTL extension?
- Answer: Two (2) years.
4.Question: Why is a stable policy regime considered essential in the textiles sector?
- Answer: It is crucial for long-term trade planning, especially when orders are placed in advance for extended delivery periods.
5.Question: What principle does RoSCTL emphasize regarding the taxation of exported goods?
- Answer: “Goods are exported and not subject to domestic taxes.”
6.Question: What benefits do other textile products (excluding Chapter 61, 62, and 63) receive if not covered under RoSCTL?
- Answer: They are eligible to avail benefits under RoDTEP.
7.Question: What are the State Taxes and Levies covered under the RoSCTL scheme?
- Answer: They include VAT on fuel, electricity, mandi tax, duty of electricity, stamp duty on export documents, and more.
8.Question: What is the primary objective of the RoSCTL scheme?
- Answer: To compensate for State and Central Taxes and Levies, along with the Duty Drawback Scheme, on the export of apparel/garments and Made-ups.
9.Question: Why is the internationally accepted principle followed in the RoSCTL scheme?
- Answer: It ensures that taxes and duties should not be exported, creating a level playing field in the global export market.
10.Question: What types of taxes and levies are rebated under RoSCTL?
- Answer: Both indirect taxes on inputs and other un-refunded State & Central taxes and levies are rebated.
11.Question: What does RoSCTL aim to achieve for the export of apparel and made-ups?
- Answer: It enhances the competitiveness of Indian exports in the value-added and labor-intensive segments of the Textile Value Chain.
12.Question: Until what date was the RoSCTL initially approved by the Union Cabinet?
- Answer: 31.03.2020.
13.Question: What was the previous extension granted to RoSCTL until?
- Answer: 31st March 2024.
14.Question: How does the RoSCTL extension contribute to the export competitiveness of garments and made-ups?
- Answer: It makes these products cost-competitive and adopts the principle of zero-rated export.
15.Question: What are the eligible textile products not covered under RoSCTL entitled to?
- Answer: They are eligible to avail benefits under RoDTEP along with other products.
16.Question: What are some examples of State Taxes and Levies rebated under RoSCTL?
- Answer: VAT on fuel used in transportation, captive power, mandi tax, and stamp duty on export documents.
17.Question: What are some examples of Central Taxes and Levies rebated under RoSCTL?
- Answer: Central excise duty on fuel used in transportation, embedded CGST paid on inputs, and Compensation Cess on coal used in electricity production.
18.Question: How does RoSCTL align with the international principle of not exporting taxes and duties?
- Answer: It rebates both indirect taxes on inputs and un-refunded State & Central taxes and levies.
19.Question: Why is the stability of the policy regime crucial for long-term trade planning in the textiles sector?
- Answer: It allows for advanced order placement and strategic planning for long-term deliveries.
20.Question: In which sector does RoSCTL primarily operate to enhance competitiveness?
- Answer: Textiles, specifically in the value-added and labor-intensive segments of the Textile Value Chain.
