Did you know that India's textile exports received a significant boost with the extension of the RoSCTL scheme until March 31, 2026? This extension provides an edge to apparel, garment, and made-up exporters by rebating taxes that are embedded in production costs, reducing the burden and helping manufacturers stay competitive globally.
This blog explores eligibility, benefits, rebates, and the application process for RoSCTL, along with potential risks and a real-life case study of Gokaldas Exports, demonstrating how exporters can leverage RoSCTL for optimal growth and savings.
What is RoSCTL?
RoSCTL is a government initiative designed to rebate state and central taxes embedded in textile manufacturing, such as fuel, electricity, and transportation taxes. This reduces production costs and enhances competitiveness. Rebates are provided through duty credit scrips, which can be used to offset customs duties or be sold for liquidity.
Who is Eligible for the RoSCTL Scheme?
The scheme targets textile exporters who manufacture and export apparel, garments, and made-up textile articles like home furnishings. Eligibility criteria include:
- A valid Importer-Exporter Code (IEC).
- Exporters not listed on the DGFT's Denied Entity List.
By focusing on these sectors, RoSCTL promotes output in labor-intensive industries, contributing to India's foreign exchange earnings.
Benefits of the RoSCTL Scheme
- Reimbursement of Embedded Taxes: Rebates are provided on taxes that are otherwise not refunded, reducing production costs.
- Improved Cash Flow: Rebates via duty credit scrips lower immediate cash outflows.
- Transferable Duty Credit Scrips: Scrips can be sold or transferred, offering liquidity.
- Increased Export Competitiveness: Offsetting embedded taxes makes Indian goods more cost-competitive globally.
Rebates Under the RoSCTL Scheme
Exporters receive rebates on:
- State Taxes: VAT on fuel, electricity duty, mandi tax, SGST.
- Central Taxes: Excise duty on fuel, CGST, customs duties on imports.
Restrictions on Rebate Under the RoSCTL Scheme
- Sector Limitation: RoSCTL applies only to apparel, garments, and made-ups, excluding other textile products.
- Usage Limitation: Scrips can only offset customs duties, not IGST or other taxes.
- Transferability: Scrips can only be transferred fully, limiting flexibility.
Documents Required for the RoSCTL Scheme
- Importer-Exporter Code (IEC).
- Shipping Bills for exported goods.
- Export Invoice detailing the Free on Board (FOB) value.
- Bank Realization Certificate (BRC) proving payment receipt.
How to Apply for the RoSCTL Scheme
The process is fully digital:
- Register on the DGFT e-platform with a valid IEC.
- Submit Shipping Bills electronically via the Customs Automated System after exporting.
- Verification of documents for accuracy.
- Issuance of Duty Credit Scrips credited to the e-duty credit ledger.
Comparison of RoSCTL vs. RoDTEP
Criteria | RoSCTL (Textile-specific) | RoDTEP (All sectors) |
|---|---|---|
Target Sectors | Apparel, garments, made-ups | All export sectors |
Rebate Coverage | State & central taxes | Excise duty, VAT, CST |
Eligible Products | Limited to apparel, garments, made-ups | All exported products |
Transferability | Duty credit scrips are transferable | Non-transferable benefits |
Incentive Rate | Higher rebate rates for textiles | Lower rebate rates across broader sectors |
Risk Factors to Keep in Mind
- Compliance Risk: Errors in shipping bills or FOB values can delay or reject rebate issuance.
- Transferability Risk: Full transferability of scrips may cause liquidity issues for exporters.
- Market Fluctuations: Changes in FOB values impact rebate calculations.
- Geopolitical and Policy Changes: Shifts in trade policies could affect the continuation of the RoSCTL scheme.
Conclusion
The RoSCTL scheme is crucial for textile exporters aiming to stay competitive globally by reducing costs through tax rebates. With proper documentation and an understanding of the risks, exporters can leverage RoSCTL to enhance profitability and sustain growth.
As India strengthens its position in the global textile market, RoSCTL will be a key driver in ensuring competitiveness based on both quality and price.
