Prices of branded garments will witness an upswing with the Government imposing a 10 per cent excise duty on ready-made and made-up garments in Budget 2011-12.

Handloom sop

On the other hand, it has reduced basic customs duty on raw silk from 30 per cent to 5 per cent to provide a sop to handloom weavers facing economic constraints.

“For sure, prices will go up. But the actual impact can be determined after we evaluate all the conditions,” said Mr Abhay Gupta, Executive Director, Blues Clothing Company, which retails branded apparels such as Versace, Corneliani, Cadini and Tween.

For unbranded goods, an optional duty regime would continue. Labelling and brand name on products would attract a duty.

“Hitherto, ready-made garments and made-up articles were exempt from Central Excise duty on the condition that no credit of duty on inputs is taken by the manufacturer,” Mr Pranab Mukherjee, Finance Minister, said in his Budget speech.

According to Mr Pinakiranjan Mishra, Partner & National Leader, Retail & Consumer Product Practice, Ernst & Young, “Earlier companies could pay voluntarily. But now it is mandatory. Our belief is that the imposition of a 10 per cent Excise duty could be good preparation for the industry when we move towards a GST regime in 2012.”

The Finance Minister said that the decision to reduce basic customs duty on raw silk would benefit 15,000 cooperative societies and about 3 lakh handloom weavers. “The details of the scheme would be worked out by the Ministry of Textiles in consultation with Planning Commission,” the Finance Minister said.

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