GST may cut garment shipments, cause loss of jobs: apparel exporters

New Delhi: Apparel exporters have brought up the problems faced by them post GST before a parliamentary panel, signalling the "strong likelihood" of a decline in garment shipments from India and possibility of job losses.

The Apparel Export Promotion Council (AEPC) made a presentation to the Parliamentary Standing Committee (Rajya Sabha) on Commerce chaired by Naresh Gujral earlier this week.

The body pressed for early consideration of tax refunds blocked on the purchase of ginned cotton (agricultural inputs such as agricultural machinery, seeds, fertilisers, power, diesel and the like) and miscellaneous central or state levies
like power cross subsidy, stamp duty, property tax and other levies for refund under Rebate of State Levies.

The council also drew the attention of the committee members to the issue of extension of exemption of IGST on import under EPCG (Export Promotion Capital Goods) or Advance Authorisation from March 31, 2018 to December 31, 2018, in order to provide a longer window for investment decisions.

It also asked for allowing utilisation of MEIS (Merchandise Exports from India  Scheme) scrips for use in payment of CGST, SGST and IGST to ease the challenges of working capital blockage and other procedural issues.

To arrest the decline in exports, the AEPC suggested that the competitive exchange rate and rupee appreciation be stabilised to protect the interest of exporters.

"The positive impact of GST is yet to be felt by garment industry where input costs have not come down. Overall effect of GST on apparel exporters, especially small and medium exporters, is burdensome and stressful due to substantial increase of working capital and higher transaction cost," AEPC
Chairman Ashok Rajani said.

"It has not only impacted the production of apparel adversely, but has also led to pressure on margins for exporters due to lowering of drawback rates."

The council, according to him, has informed the parliamentary panel that under the prevailing circumstances, there is a strong likelihood of exports from India dipping in the near future, as the global garment industry is very
competitive.

"Further, competing countries like Bangladesh and Vietnam have cost advantages on account of preferential trade agreements with major export markets, and buyers are moving to these destinations for sourcing. This could have a cascading effect on the job scenario as exporters will be forced to shed
jobs," Rajani added.