Industry & Economy
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Budget
Garment sector wants duty cuts
Swetha Kannan
AN EXPORT GARMENT unit in Erode, Tamil Nadu.
The garment industry is hoping that both excise and import duties will see a sharp trim in the Budget this year.
Mr Rajendra Hinduja, Director, Gokaldas Exports, said the industry has approached the Finance Ministry with its demand to reduce excise duty on man-made fibre and fabric (from 8 per cent to 4 per cent) "so that it is on par with cotton." "The Ministry believes the demand is justified and has promised to look into it," said Mr Hinduja.
According to Mr J. Suresh, COO - Own Brands, Arvind Brands, if the import duty on fabrics is brought down, fabrics can be imported at cheaper prices compared to Indian prices. "But this will have an impact on large number of Indian players who are primarily small manufacturers. So the next best thing is to reduce or remove import duty on man made fibres, which will help Indian manufacturers source raw material at lower prices; hence they can be competitive. Indian consumers will also benefit from lower prices." He, however, said the 4 per cent VAT on garments should continue.
Mr Hinduja also wants the Budget to address the issue of contract labour and exit route for entrepreneurs to quit manufacturing. "Entrepreneurs can open a unit but cannot close it without government permission; but the government never allows it. Hopefully, the Budget will address this anomaly. We also want to employ contract labourers for Rs 90 a day for 200 days in a year. The garment business is seasonal ... there is no point employing workers for the whole year."
He is also not happy with the Government's announcement that the tax holiday for export-oriented units (EOUs) will end by March 2009. "This will not encourage investment in EOUs, which have been seeing negative growth lately. There is so much talk of SEZs but that is yet to take shape. So, the focus should be on export units as it will give a push to employment."
Mr R. Sivaram, Executive Director, Royal Classic Group, wants the Technology Upgradation Fund Scheme to be extended by another two years. He also hopes that the prime lending rates of banks will be stabilised.
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