India's export sector is expressing growing concerns over the recent sharp reduction in export tax rebates, which has raised alarms among industry leaders. The move is expected to have a negative impact on key sectors such as apparel, leather, handicrafts, and metal products. Sakthivel, president of the Indian Export Organization (FIEO) Union, highlighted that the cut in tax rebate rates for items like apparel, leather, metal crafts, carpets, and other goods will likely hurt employment in these industries. He warned that the changes could undermine the fragile recovery of these labor-intensive sectors. The Central Board of Indirect Taxes and Customs (CBEC) recently announced the reduction in tax rebate rates, which are essentially the import duty refunds for raw materials used in exports. Some products saw their rebates slashed by as much as 30%, creating uncertainty among exporters. Despite a 28.6% increase in India’s exports between April and August, many sectors—particularly clothing, handicrafts, handlooms, and carpets—are still recovering from the global economic downturn of 2008–2009. These industries are now facing new challenges due to weak demand in major markets like the United States and the European Union. The tax rebate for cotton garments was reduced from 8.8% to 7.7%, while blended garments (including cotton and man-made fibers) saw their rebate drop from 9.8% to 8.6%. The revised rates came into effect on September 20, adding pressure to an already struggling industry. In a letter to the Minister of Finance, Premal Udani, Secretary of the Export Promotion Council, warned that the ready-made apparel sector is still grappling with the aftermath of a deep recession. He pointed out that rising costs of basic raw materials, including cotton, yarn, and fabrics, have further strained the industry. With shrinking exports, job losses are becoming a real concern. Other sectors are also feeling the pinch. Tax rebates for leather and leather products have been lowered by 5% to 15%, while those for bicycles and sporting goods dropped by 9% to 20%. Steel products faced a steep reduction of 25% to 30%, and stainless steel vessels and cutlery saw their rebates fall from 12.5% to 8.8%. Industry leaders are urging the government to reconsider the policy, arguing that it may hinder long-term growth and destabilize an already vulnerable export sector. As businesses brace for the full impact of the new rules, the focus remains on how to maintain competitiveness in a challenging global market.

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