Textile industry, which has been reeling under the pressure of skyrocketing cotton prices got no solace from the Union Budget, instead ready-made garment manufactures have been levied mandatory excise duty of 10 per cent. This will essentially make branded garments costlier. The export sector too was left with nothing in its platter. “Raw materials like cotton and yarn’s prices are already at an all time high. The excise duty on branded apparel will definitely strike the consumers, because earlier the apparel prices are based on the raw materials and production costs but now the levied tax will also add on to the total pricing and subsequently passed to the consumers at the end,” Lalit Agarwal, managing director, V-Mart Retail.
“This is for the first time that garment manufacturers are being levied compulsory excise duty as a result of which every unit will have to be registered. This in turn will add severely to the transaction cost and cost of record-keeping and the whole process will get cumbersome,” Premal Udani, chairman of Apparel Export Promotion Council (AEPC) said. Ready-made garment manufacturers who wished to avail centavo credit only had to pay the excise duty till now. Over 90 per cent of apparel manufacturers, which are small and medium enterprises, were not availing CENVAT and the-refore had never paid excise duty at the factory-level. Implementation of the tax will be complex process for them. “The basic customs duty reduction on raw silk and technical yarn will not have much impact,” said Rajat Luthra, CEO OF Celio Future Fashion.
The new levy also differentiates branded garments from garments and the potential fear that evasion in this sector may come back as in past is not ruled out, said Jayesh Shah, director & CFO, Arvind.
The Union Budget, however, allocated `3,000 crore to handloom weavers and cooperative societies through Nabard. This would benefit 15,000 cooperative societies and three lakh handloom weavers.