Garment sector appeals to PM to roll back excise duty

17 Mar '16

3 min read

The Karnataka Hosiery and Garment Association has appealed to the Prime Minister to withdraw excise duty on branded hosiery and garments and maintain status quo.

Finance Minister Arun Jaitley had proposed the excise duty on branded hosiery and garments in the Union Budget.

In a letter to the PM, the Chairman of the Taxation Committee of the Karnataka Hosiery and Garment Association, Sajjan Raj Mehta said the textile Industry of which hosiery and readymade is an integral part has been dealt a severe blow with the imposition of 2 per cent excise duty on branded products with MRP of Rs 1000 and above.

“We pray to you to urgently examine the matter and take up our humble request for removal of mandatory excise duty on products at the earliest and save the industry which has come to a standstill,” Mehta said in his letter.

Excise duty on readymade garments would both increase prices for consumers and put a burden on manufacturers.

"The 2 per cent duty will increase cost of garments by 5 to 6 per cent by the time they reach consumers. In many cases, manufacturers may start compromising with quality to keep retail prices below Rs 1,000 to avoid excise duty. This is likely to encourage un-organised readymade garments sector,” Mehta wrote.

He claimed that the common man's clothing need has been impacted by high inflationary trends in the last 15 months. The excise duty “tantamounts to robbing an Indian the right of affordable clothing”.

According to Mehta, the excise duty can potentially lead to change in the employment dynamics or shut down small manufacturing units which would result in mass unemployment.

“We would like to stress here that the apparel industry is one of the largest employers of women in the country. In the event of units closing down, many women stand to lose their means of livelihood,” he said.

Mehta also pointed out that while the domestic manufacturers have been levied with excise duty, global retailers in India do not have to bear any such additional burden. This shall result in a relative advantage for imported products as the Indian products keep becoming more and more expensive. This problem will be more severe in case of SAARC countries where duty free access has been granted. This would lead to domestic brands getting uncompetitive against imports from these countries especially the likes of Bangladesh, Sri Lanka, etc. and eventually result in the decline of the Indian industry.

He further said that with the GST likely to be rolled out this year, there was no logic for making the industry go through the travails of excise regime for a short period.

The Karnataka Hosiery and Garment Association's letter to the PM comes on the heels of the South India Garment Association (SIGA)'s request members of Parliament (MPs) from Bangalore to represent them and help save the garment industry.

It said the garment industry is passing through very rough weather and the levy of excise duty will further adversely impact the industry. (SH)

Fibre2Fashion News Desk – India

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