Why in news
- Ministry of Textiles has extended the Rebate of State and Central Taxes and Levies (RoSCTL) scheme till 31 December 2026.
- The extension provides policy predictability and tax neutrality for labour-intensive apparel and made-ups exporters.
Key terms
Zero-rating of exports
Policy where output exports are taxed at zero rate while allowing full recovery of input taxes incurred.
Duty Credit Scrips
Freely transferable electronic certificates used to pay basic customs duties on imported goods.
Embedded Taxes
Indirect taxes paid on raw materials, energy, and transportation that remain un-refunded under standard tax systems.
Made-ups
Non-apparel fabricated textile articles including bedsheets, curtains, towels, and home furnishings.
What is the RoSCTL Scheme?
- Operational since March 2019, RoSCTL provides remission of embedded State and Central taxes and levies on export products.
- It covers levies like State VAT/GST on inputs, fuel taxes, electricity duty, and mandi tax that are not refunded through GST or duty drawback.
- Anchored in the principle of zero-rating of exports to ensure domestic taxes are not exported alongside goods.
Key details and impact of extension
- Extends the duty credit scrip mechanism through December 2026 for garments and made-ups under Chapters 61, 62, and 63.
- Benefited over 15,400 exporters across 444 districts in 2025-26, predominantly supporting small and medium enterprise (MSME) exporters.
- Enhances cost competitiveness of Indian textile products against low-cost manufacturing rivals in global markets.
Why it matters
- Textile sector is India's second-largest employment generator, making sustained export rebates crucial for job retention.
- Complies with World Trade Organization (WTO) rules on non-actionable export relief by limiting benefit strictly to indirect tax remissions.
Prelims facts
- RoSCTL applies specifically to garments and made-ups, whereas RoDTEP covers other export sectors.
Mains discussion
- Role of indirect tax rebates in boosting labor-intensive manufacturing exports under global supply chain realignment.
Source: PIB Press Release
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UPSC has asked this before
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