Ludhiana/Gurugram, August 3
With apparel exports already on the decline, uncertainty over the continuation of Merchandise Exports from India Scheme (MEIS) is a double whammy for region-based exporters who are facing stiff competition from Bangladesh and Vietnam.
According to exporters, there is a sense of confusion among the exporting community as they don’t know whether the government will continue the scheme or extend it or scrap it. “We have an indication that the government will not continue the scheme, but we are yet to receive any formal notification in this regard. Once it is clear, we can devise our strategy,” said an exporter.
The Central government plans to replace MEIS with a new duty refund scheme called Rebate of State and Central Taxes and Levies (RoSCTL). A 4% incentive is given to garment exporters under the MEIS. Industry insiders said the move, if implemented, will “kill” the sector, which is the second largest employment generator after agriculture.
Pawan Garg of Worldwide Textiles Pvt Ltd said the changes might have been announced under the RoSCTL but its implementation was still awaited. “We understand that we will be given revised reimbursement under the new scheme. But, before abolishing any existing scheme, we should be given at least 4-6 months’ time. We will suffer losses as we have quoted prices after factoring in 4% incentive under the MEIS,” he said. He exports ready-made garments to the US, Brazil, Arab countries, Panama and South America.
Harish Dua, president, Knitwear and Apparel Exporters Organisation and member of the Apparel Export Promotion Council (AEPC), told The Tribune they have not received any formal notification about the RoSCTL so far though changes in the scheme were announced 2-3 months ago.
The proposal to replace the scheme has rattled the apparel sector of North, mainly concentrated in Ludhiana and the NCR region. According to industry, due to this uncertainty, over 1,600 small and big units in Gurugram alone have stopped taking and processing any international order. Many ancillary units have even asked the labour to look for alternate jobs in the next few months.
“We face stiff competition from Vietnam and Bangladesh and thus cannot think of increasing prices. Under the MEIS, we have been getting 4% incentive. However, now, we will face 8% loss on an average and we won’t be able to bear it. The loss of international market will lead to shutdown of many small cottage units resulting in labour losses,” said Praveen Yadav, president, Udyog Vihar Industrial Association.
The Garment Exporters & Manufacturers Association (GEMA) said the consideration of RoSCTL as a substitute to MEIS is unjustifiable. The two should be seen independent of each other.
“The government should launch or roll back any policy keeping in mind the future of labourers, as any loss to business will result in loss of employment,” said Kuldeep Jhangu, a labour union representative in Gurugram.
