The export of ready-made garments had declined by nearly 40% to $829 million in October. The move on MEIS is expected to cost the exchequer a shade under Rs 1,150 crore during the current financial year and Rs 685 crore in 2018-19, the commerce department said.

The government to boost to ready-made garments and made-ups to help manufacturers tide over the adverse impact of GST and provide a thrust to shipments of these two major segments of the textiles sector on Friday enhanced incentive rates under the Merchandise Exports from India Scheme (MEIS) to 4%, a source said.

While the refund of state levies will be increased to 1.6 percent from 0.9 percent over next few days. The benefits had been reduced after GST was rolled out and exporters have been bitterly complaining about massive job losses and closure of units due to loss of competitiveness.

With restoration of a large part of benefit exporters can hope to compete more favourably with Vietnam, Bangladesh and others from which global buyers source products.

According to an official statement, the Directorate General of Foreign Trade (DGFT) issued a public notice on Friday by which rates for incentives under the Merchandise Exports from India Scheme (MEIS) for two sub-sectors of textiles industry — readymade garments and made ups — have been enhanced from 2% to 4% of value of exports with effect from November 1, 2017 till June 30, 2018. It added that the estimated annual incentives will be ₹1,143.15 crore for 2017-18 and ₹685.89 crore for 2018-19.

Under MEIS, the commerce department offers duty benefits of 2-5 percent, depending upon the product and country.

This measure will incentivise the exports of labour intensive sectors of ready-made garments and made ups and contribute to employment generation.