AEPC seeks tax incentives in budget to boost garment manufacturing

AEPC Seeks Tax Incentives In Budget To Boost Garment Manufacturing

In order to boost domestic manufacturing and India’s garment exports, the Apparel Export Promotion Council (AEPC), has sought uniformity in GST and more interest subsidies in the upcoming union budget.

AEPC had also demanded tax breaks for clothing producers which implement Environmental, Social, and Governance (ESG) and other international quality standards and compliances.

“Interest equalisation rates on pre and post-shipment export loans for manufacturers who are not micro, small, and medium enterprises (MSME) exporters have been lowered from 3 to 2 per cent,” AEPC said.

According to AEPC, the exporting community has been severely hampered by the high cost of capital.

To boost the industry’s competitiveness globally and provide them with access to operating capital, AEPC asked the government to raise the rates under the plan to 5 per cent for all apparel exporters.

The statement stated that a uniform tax of five per cent should be applied to the Goods and Services Tax (GST) along the whole value chain of manmade fibre like fibres, yarns and fabrics.

The GST rate on manmade fibre is currently 18 per cent, yarn is 12 per cent and fabric is 5 per cent. As a result, MSME units are experiencing unutilised input credit and liquidity problems.

“Foreign customers insist on preserving consistency and quality and avoiding the use of counterfeits in order to protect their brand image,” AEPC noted.

The apparel exporter’s body said that any departure in the quality and specification leads to the shipment’s rejection.

So, it recommended the government to incorporate embellishments and trims under the Import of Goods at Concessional Rates (IGCR) duty regulations as some embellishments and trims are not duty-free.

“AEPC has submitted a list of items currently not permitted, such as drawcord, elastic band/tape, metal tab/stopper/clip, velcro tape, leather badge, and D-ring, and has requested these items be included in the list for eligibility for duty exemption,” the AEPC statement added.

“We will be anticipating the government’s response on the recommendations, which have been made after wider industry consultations,” Mithileshwar Thakur, Secretary General of AEPC stated.



Indian Apparel, Apparel & Textile News.