Excise duty regime spells trouble for garment sector

The shift to a mandatory excise duty regime for branded ready-made garments and made-ups proposed in the Budget, even as the optional duty structure has been retained at the input stages, could result in hassles at the implementation level.

Industry players contend that with the optional excise duty regime set to continue for the yarn and fabrics sectors, most of the inputs for the garment and made-ups sectors would be coming through the optional excise duty regime, thereby resulting in very little duty credit to be utilised for payment of excise duty by them. “The mandatory excise duty of 10 per cent imposed on branded readymade garments and made-ups would not only have serious adverse impact to these highly labour intensive segments but would also have significant operational problems at the level of implementation,” Mr Shishir Jaipuria, Chairman, Confederation of Indian Textile Industry, said.

The Apparel Export Promotion Council, Chairman, Mr Premal Udani, said the garments industry “requires the flexibility in excise duty” to improve its value addition capabilities and in-time deliveries to global markets. The optional scheme for payment of excise duty on readymade garments and textile made-ups, which bear a brand name or are sold under a brand name, has been removed in the Budget proposals, with a 10 per cent excise duty imposed on these goods without Cenvat credit facility.