Shares of several prominent Indian textile companies, including Raymond Ltd, Welspun Living Ltd, and Alok Industries, experienced significant rallies of up to 8% in early trading on Monday. This surge in textile stocks comes amid reports that the government is considering extending the Rebate of State and Central Taxes and Levies (RoSCTL) scheme beyond its current September 30 deadline.
Government Weighs RoSCTL Extension
The RoSCTL scheme is a vital export incentive designed to reimburse embedded state and central taxes and levies incurred by textile exporters. Its primary objective is to ensure that domestic taxes do not inadvertently increase the cost of Indian textile products in global markets, thereby maintaining their competitiveness.
For India's labour-intensive textile and apparel sectors, the scheme is crucial. Without it, embedded taxes and levies can add substantial costs to products shipped internationally, hindering their ability to compete with suppliers from other major textile-exporting nations.
Industry Calls for Longer, Stronger Support
The textile industry has actively lobbied for a five-year extension of the RoSCTL scheme, advocating for its tenure to align with the period covered by the Sixteenth Finance Commission. Furthermore, the industry has urged the government to double the current financial year's allocation of Rs 5,000 crore to meet the sector's expanding requirements and provide greater certainty to exporters.
While the industry's proposals are under consideration, the final decision regarding the duration and financial allocation of any extension rests with the finance ministry's Department of Expenditure (DoE).
Government expenditure under RoSCTL was estimated to reach Rs 10,010 crore in FY26, according to the revised estimate presented in the FY27 Budget. This figure is significantly higher than the Rs 5,000 crore allocation currently provided for FY27, highlighting the scheme's financial impact.
Key Textile Stocks See Gains
Among the companies benefiting from the positive sentiment, Raymond Ltd shares climbed 8% to Rs 1055.84, with its market capitalization reaching Rs 6962 crore. Welspun Living stock saw a gain of 1.63% to Rs 218.15, pushing its market cap to Rs 20,383 crore. Alok Industries shares also rose by 1.5% to Rs 7.20, increasing its market cap to Rs 3545 crore. KPR Mill shares gained 0.23%, while Indo Count Industries stock rose 1.55% to Rs 454.70 in early deals.
A longer extension and a higher allocation for RoSCTL would provide textile exporters with enhanced policy visibility and robust support, strengthening their position in the highly competitive global textile market. The government had previously extended the scheme by six months, up to September 30, 2026, on April 1 of this year, with the scheme having been operational since March 7, 2019.