Apparel makers shut shop to protest excise impost

Our Bureaus Bangalore/New Delhi | Updated on March 15, 2011

Garment traders and workers stage a protest demonstration against the imposition of excise duty in New Delhi on Friday. — Photo: S. Subramanium

All apparel manufacturing activity across the country, including the garment hub of Tirupur, came to a halt on Friday as a mark of protest against the imposition of 10 per cent excise duty on branded garments. And, on Monday, garment retail outlets across the country will be shut, resulting in a possible loss of Rs 350-400 crore for the apparel industry.

Meanwhile, industry representatives have met the Textile Minister, Mr Dayanidhi Maran, and the Finance Minister, Mr Pranab Mukherjee, on the issue and they hope for a duty roll-back soon.

Scores of retailers including Future Group, Shoppers Stop, Pantaloon, and Madura Garments, Landmark Group and Arvind and small apparel sellers across the country are expected to participate in the bandh on Monday, organised by the Clothing Manufacturers' Association of India (CMAI). Suppliers, manufacturers, wholesalers, distributors and several industry bodies have also shown support and solidarity on the issue.

Says Mr Rahul Mehta, President, CMAI: “Price rise is one issue. But with the GST planned next year, introducing excise duty just for a year has no logic. There is also the hassle of registration and other procedures. The garment industry is still largely fragmented and consists of several small players — only 10 per cent of the industry comprises the large players. An excise duty will force the industry to remain fragmented and small for long.”

The current annual turnover of the apparel industry is estimated at Rs 1,50,000-1,70,000 crore; 80 per cent of the players could attract excise duty, irrespective of whether they are big or small, as long as they operate in a retail outlet, according to analysts.

“We sell about 40 per cent of our merchandise on discounted prices during the sale period. But we will have to pay excise duty on full price on our entire goods. Plus, the whole excise collection mechanism would be tedious. We buy from 200 vendors — so excise has to be collected at 200 places,” laments Mr J. Suresh, Managing Director, Arvind Brands and Retail.

The excise duty has been announced suddenly without any breathing time, says Ms Rachna Aggarwal, CEO, Indus League, a Future Group company. “There will be 10 per cent excise duty on 60 per cent of MRP. It should have been 40 per cent.”

Says Mr Rakesh Grover, President, Intimate Apparel Association of India, “The excise duty is not only exorbitant, but also unfair on the common man. This will automatically raise the MRP on a basic commodity like innerwear and increase the burden.”

The Retailers' Association of India, whose members include the top retailers in India, held a conference call on Friday to decide on the sector's response and strategy.

Our Coimbatore Bureau adds: Nearly 2,000 hosiery manufacturing units in Tirupur downed their shutters on Friday as part of the all-India strike. Mr Viking A.C. Eswaran, President, South India Hosiery Manufacturers' Association , Tirupur, said most of the hosiery units in the town r were small units and it would be virtually impossible for these small units to maintain accounts and calculate the excise duty payable by them.

The total number of workers affected by today's closure would be around 4 lakh in Tirupur.

Published on March 04, 2011

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