With India heading towards GST regime, re-introduction of excise duty on garments will not only lead to huge confusion but a great fall and downsize the garment manufacturing sector. The latest buzz about the return of excise duty on branded garments is worrying the domestic apparel industry.
According to South India Garment Association (Siga) although various schemes, incentives and subsidies have been given to the garment sector to develop manufacturing and create jobs but by put garment sector under the excise duty may scale down the garment industry and lead to unemployment. As, Garment manufacturing is one of the most labour intensive sectors and there is huge opportunity for employment.
In 2004 excise duty was removed after it made a deep negative impact on garment trade and industry which was reimposed by the then Finance Minister Jaswant Singh in 2002. The industry during the two years of excise regime faced great difficulties and many small & medium garment manufacturers closed businesses leading to huge un-employment especially among women. Again in 2011, Finance Minister, Pranab Mukharjee re-imposed excise duty but within one year in next budget in 2012, government was forced to roll back the excise duty.
Both the time delegation headed by leading associations met the Union Finance Department and Textile Department to discuss problems faced by the garment manufacturing industry, nature of fashion driven industry, complexities of excise law amendments, while appealing for modifications in excise law for the garment sector.
According to Anurag Singhla, Honorary Secretary of Siga, there is no definition of branded garments underlined by the government. Merely attaching a label does not make a piece of garment a branded one. A men’s shirt of MRP 250 with label falls under excise net, while a ladies salwar suit or other outfit worth Rs 2000 without a label or without brand name does not fall under the excise duty net. Such a definition leads to unhealthy business practices.
Bangladesh has been encouraging their garment industry and to an extent is ahead and posing a threat to Indian garment industry. Moreover, bilateral trade treaty with Bangladesh may result in shifting manufacturing activities to neighbouring countries like Nepal, Sri Lanka, Thailand and Bangladesh resulting in considerable reduction in garment manufacturing leading to increasing unemployment in the domestic industry in India which would be a grave problem of our Nation and its future development process.
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