India credit rating agency, ICRA sees the step as providing stability and enabling apparel exporters to price their products without being concerned about retrospective changes, according to Mint.

The Union Cabinet chaired by Prime Minister Shri Narendra Modi has given its approval to continue the Rebate of State and Central taxes and Levies (RoSCTL) scheme with the same rates as notified by Ministry of Textiles that was dated 8 March 2019.

India’s government states continuation of the scheme is expected to make these products globally competitive by rebating all embedded taxes/levies which are currently not being rebated under any other mechanism.

The aim is to ensure a stable and predictable policy regime and provide a level playing field to Indian textiles exporters.

The extended scheme will encourage start-ups and entrepreneurs to export, generate additional investment and create 100,000 jobs

In an official statement the Ministry of Textiles said: “It is a globally accepted principle that taxes and duties should not be exported, to enable a level playing field in the international market for the exporters. In addition to import duties and GST which are generally refunded, there are various other taxes/duties that are levied by Central, State and Local Government which are not refunded to the exporters. These taxes and levies get embedded in the price of the ultimate product being exported. Such embedded taxes and levies increase the price of Indian apparel and make it difficult for them to compete in the international market.”

The scheme launched just one year after the Covid-19 pandemic so extending the scheme aims to provide a stable policy for buyers and exporters who need to have their orders placed well in advance.