Consumers can expect a marginal relief in prices of branded garments, with the Finance Minister announcing an increase in abatement relief for excise duty. Garment retailers had earlier planned a 10-12 per cent hike in retail prices to tide over the excise duty imposition, but now the hike could be lower at 7-8 per cent.

Manufacturers had to earlier pay 10 per cent excise duty on 60 per cent of MRP ? there was an abatement of 40 per cent. With Mr Pranab Mukherjee announcing an enhancement in abatement to 55 per cent, retailers now have to pay excise only on 45 per cent of retail sale price.

The abatement increase was announced by Mr Mukherjee while moving the Finance Bill in the Lok Sabha.

Benefits

The benefits of abatement increase will definitely be passed on to the consumer, says Mr Ajay Ramachandran, Brand Director, Van Heusen, which had planned a price hike from April 1.

But the relief could be just marginal. ?The latest announcement by the FM is not a full relief. We had earlier planned to introduce a 10-12 per cent increase in retail prices in the market in May. This hike could now be 7-8 per cent,? says Mr J. Suresh, Managing Director, Arvind Brands and Retail.

Future-Group owned Indus League Clothing had already hiked prices by 10 per cent this month. ?The abatement increase could give us some flexibility in pricing. But stocks that have already gone to stores with a 10 per cent hike will remain at those prices. For the new stocks, we would look at a slightly lower MRP,? says Ms Rachna Aggarwal, CEO, Indus League.

Larger issue

Retail price is just one issue. The larger issue is that of operational difficulties in implementing excise duty across manufacturers, says Mr Ashesh Amin, President ? Apparel and Retail, S. Kumar's Nationwide.

The Finance Minister had earlier announced a 10 per cent excise duty on branded garments during the Budget. This led to severe criticism and protest across the industry, including retailers and manufacturers.

Related Topics
comment COMMENT NOW