According to an official source familiar with the situation, the government may extend the 'Reimbursement of Central and State Taxes and Duties' scheme (RoSCTL), which serves as a stimulus for the textile industry, beyond September 30.
Although the industry sought a five-year extension of this scheme to synchronize it with the period of the Sixteenth Finance Commission, the final decision on the extension period remains with the Department of Expenditure (DoE) of the Ministry of Finance, an anonymous source reported.
The same official added that they have also requested the DoE to double the amount of funds allocated under this scheme, increasing it from the 5,000 crore rupees allocated for the current fiscal year.
Under RoSCTL, the government reimburses embedded central and state taxes on textile exports, including apparel, articles, and woven or knitted goods. The goal of this measure is to prevent tax leakage, which helps maintain product competitiveness.
According to a revised estimate presented in the Budget for the 2027 fiscal year, the government spent 10,010 crore rupees on RoSCTL in the 2025–26 fiscal year (FY26).
The final decision on the extension and funding of the scheme is expected by September 30. Stability and predictability of the RoSCTL scheme have been long-standing demands of the textile industry.
Updip Singh Chatrath, Chairman of the National Council for Textile and Technical Textiles of Assocham, noted that 'policy consistency is a key factor influencing investment decisions, and the textile sector needs sustained investment to achieve the government's goals for 2030.'
The government has set a target to increase textile exports to $100 billion by 2030 (currently around $37 billion) and grow the sector size to $350 billion by 2030 (currently around $190 billion). Industry estimates suggest that such growth will require investments of at least $60 billion, added Chatrath. He emphasized that these investments, in turn, require certainty and policy stability.
The tax exemption scheme was initially launched ten years ago as the Reimbursement of State Levies (RoSL) scheme, which returned local and state taxes. After the introduction of the Goods and Services Tax (GST) in 2017, the government replaced RoSL with RoSCTL. This transition was necessary because, although GST consolidated several major indirect taxes, some embedded central and state duties remained unrefunded, necessitating the creation of a new mechanism to sustain export competitiveness.
The government is also implementing a similar tax refund scheme for other exported goods called Reimbursement of Duties and Taxes on Exported Products (RoDTEP), which is also due to conclude on September 30. The possibility of extending this scheme for five years is currently being actively considered.
These two flagship tax exemption schemes have been extended multiple times previously, often simultaneously. In March, the government last extended both schemes by six months to support exporters amid the conflict in the Middle East.