As per the current proposal, some levies- the rural development cess, the textile committee cess and the mandi fee- that account for 2.5% of the cost of the products, are not to be neutralised under the scheme, which envisages to offset most central and local levies.
According to secretary general, apparel export promotion council (AEPC), KK Jalan, The new scheme does not take into account a lot of other taxes like the mandi fee (which is an agricultural marketing fee levied in Tamil Nadu), rural development cess (which is levied in Punjab and Haryana) and the textile committee cess. Since the country exports mostly cotton based apparel, the non-reimbursement of these fees would hurt the margins of the apparel exporters.
The fees that have not been factored in the new scheme account for 2.5% of the freight on board (FoB) value of a single shirt. The AEPC has recently written to the textile ministry to address this issue, Mr Jalan added.
The new duty reimbursement scheme will compensate exporters for octroi, cess on petrol and diesel and taxes on electricity.
Exporters are likely to get reimbursements at the rate of 1.5-5.2% of the value of the exported product. The reimbursement rate for various exported products will be pre-determined.
