Business Daily from THE HINDU group of publications
Sunday, Jan 07, 2007
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Business Daily from THE HINDU group of publications Sunday, Jan 07, 2007 ePaper |
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Industry & Economy
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Readymade Garments Apparel export body hails decision to remove cess G. Srinivasan
The cess was an "irritant" as the exporters were compelled to get the cess paid and endorsed before shipment, entailing avoidable paperwork.
New Delhi , Jan. 6 The Apparel Export Promotion Council (AEPC) has hailed the decision of the Union Government for exempting readymade garments from Textile Committee cess, which would go some way in making the $9 billion garment export industry globally competitive. Reacting to the revocation of cess on garment industry, the AEPC Chairman, Mr Vijay Agarwal, told Business Line here that the cess was an "irritant" as the exporters were compelled to get the cess paid and endorsed before shipment, entailing avoidable paperwork and adding to transaction cost.
Hassle-free Milieu
He said during the inter-ministerial meeting of the Commerce and Finance Ministers held here on December 21, the AEPC pleaded for its removal to provide a hassle-free milieu for exporters to undertake their operations instead of frittering away their energy in complying with cumbersome procedures and paperwork. The extant rate is 0.05 per cent ad valorem in vogue effective from July 1, 1997. However, textile industry is sore over the removal of cess on garment segment alone and not on the whole industry. In 2004-05, the Textile Committee remitted to the Government of India close to Rs 50 crore towards the cess collection, whereas the funds received by the Committee for its budgeted operation during that year was Rs 21 crore. The Committee also generated revenue from consultancy services and income from the regulatory certification scheme that was in vogue till the phase out of quota regime on December 31, 2004.
Total Cess
Officials of the Textile Ministry said that during the fiscal year 2005-06, the total cess collected by the Committee amounted to Rs 52.65 crore. Out of this, the contribution of garment sector (i.e. mainly on export on garment based on shipping bills) is Rs 17.50 crore, which is approximately 33 per cent of the total collection. With the removal of cess, there would be loss of about Rs 17.50 crore to the total cess collection. The composite mills are also paying cess on readymade garments. Based on returns, their contribution to the total cess collection comes to around 10 to 15 per cent of the total cess collection. Hence, the loss due to exemption of cess on garments would be roughly 40 per cent of the total cess collection. Even as the garment industry is glad about its removal as part of the rationalisation of the tax and cess burden in the changed scenario of global competitiveness, the other components of textile manufacturers are left with the unenviable task of continuing to pay cess.
More Stories on : Readymade Garments | Taxation | Industry Associations
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