Coimbatore: Textile exporters have urged the Union govt to immediately restore the earlier rates and value caps under the Remission of Duties and Taxes on Exported Products (RODTEP) scheme, warning that the recent 50% reduction would severely affect the industry

Industry representatives said the abrupt cut in RoDTEP benefits from Feb 23 has come as a shock, particularly to the power loom, handloom, spinning and yarn fabrics segments that are already under strain.

The scheme, introduced in Jan 2021, aims at refunding unrebated embedded taxes to ensure zero-rating of exports and enhance global competitiveness.

According to exporters, Indian firms are competing with their counterparts in Vietnam, Bangladesh, Turkey and China, where robust remission mechanisms are in place. Even a 1%-2% cost disadvantage could result in diversion of orders and erosion of price competitiveness, they cautioned. They said stable RoDTEP rates were crucial to fully leverage the recently concluded free trade agreements with the UK, EU and the US.

"Any erosion of benefits will hurt profitability, capacity utilization and employment in labour-intensive textile clusters. RODTEP scrips improve liquidity for MSMEs facing high interest costs.

Restoration of earlier rates will safeguard jobs, boost exports and help achieve the $100 billion textile export target by 2030," exporters said.

Durai Palanisamy, president, Southern India Mill's Association, appealed the Centre to restore the earlier notified RoDTEP rates and value caps.

Under RODTEP scheme, textile exporters previously received tax refunds ranging from 2.5% to 4.7%. The 50% cut is a major setback for the textile industry, which had been facing immense challenges for the past six months due to the US import duties. The reduction in refund rates would push the industry into further distress, said G Arulmozhi, president, Open and Spinning Mills Association. He also urged the Centre to restore the original scheme and continue implementing tax relief without any reductions