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AEPC - Limited package for apparel sector in Union Budget

16
Mar '12
Apparel Export Promotion Council (AEPC) appreciates the various progressive measures taken in the Union Budget 2012-13. Chairman AEPC, Dr. A Sakthivel feels that, “Extension of relief for R&D activities and testing laboratories and exemption upto 150% for expenditure on skill development in manufacturing sector as also allocation of Rs 1000 cr for National skill development programmes are steps in the right direction. Apparel industry also welcomes the initiatives for improving infrastructure facilities like roads, ports and ICDs, which have been major bottlenecks for exports.”

The Council also welcomes the Rs 5000 cr allocated for venture capital and exemption of capital gains tax for purchase of new plant and machinery by SMEs. The Council looks forward to the Government's intent to implement GST by August 2012.

However, the textile package in the Budget will have limited impact on the textile and apparel industry at large. The textile package has only addressed the handloom and power-looms sector and not the larger needs to the industry, specially the credit availability at concessional rates.

Custom duty relief to shuttles-less looms and processing machinery is welcome. The Council also welcomes the extension of concessional rate of custom duty of 5% to new textile machinery. “However, the Council was expecting zero customs duty for special machineries for manufacturing synthetic garments and processing of fibers, which could have increased our export competitiveness,” Dr. Sakthivel added.

Chairman AEPC, Dr. A Sakthivel said, “The increase in standard excise duty rate from 10 per cent to 12 per cent will adversely impact raw material costs. Besides this, the Council is disappointed that the recommendation for removal of excise duty on branded garments has not been accepted.”

The increase in service tax will also adversely impact the apparel sector which has high use of services for exports. In fact, the Council has been recommending exemption of service tax on ECGC premium besides insurance premium paid, bank charges, and some other services essential for exports. Given the increase in number of services to be included in the service tax net and increase in the service tax rate, the Council strongly recommends increasing the service tax refund rate for the apparel sector to 1.5% from the present 0.15%.

Apparel Export Promotion Council


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