Most of the textile and apparel industry does not avail of CENVAT, says the Textiles & Apparel Achievement Report released by the Ministry of Textiles. It goes on to say that the CENVAT route will prepare the textile and apparel industry for GST when it comes into force. Central Value Added Tax (CENVAT) is a tax levied on the manufacture or production of movable and marketable goods in India.

The report released by Department of Industrial Policy and Promotion (DIPP) on November 24 shows that there has been an upward revision of duty drawback rates wherein All Industry Rates (AIR) of Duty Drawback has been revised for various products from November 23, last year (2015). The report also shows comparison of Duty Drawback rates when CENVAT is availed by exporters and when it is not.

In case of cotton yarn, when CENVAT was not availed, the duty drawback rates were in the range of 2.8-4.7 in the year 2014 and between 2.5 - 4.5 in 2015. However, when the CENVAT was availed, the duty drawback rate were in the range of 0.9 – 1.3 in 2014 and between 1.2 – 1.4 in 2015. In case of apparel, when the CENVAT was not availed the duty drawback rates were in the range of 7.2 – 10.5 in 2015 while when the CENVAT was availed, the rates were in the range of 2.0 – 3.5 in 2015. Similar were the cases with cotton fabric, man-made fabric and home textiles.

The report also highlights the textile sector in India accounts for 10 per cent of the country’s manufacturing production, 5 per cent of India’s GDP and 13 per cent of India’s exports earnings. Textile and apparel sector is the second largest employment provider in the country employing nearly 51million people directly and 68 million people indirectly in 2015-16.