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03-March-2016

Clothing Manufacturers Association of India (CMAI) has expressed its anguish over the imposition of excise duty on the ready-made-garments and made ups segments of the textile industry as proposed in the union budget for 2016-17.

In a representation to the textile secretary, Reshmi Verma, CMAI president, Rahul Mehta pleaded for reconsideration of the proposal especially when the entire textile and clothing industry in the country is already going through a crisis because of demand recession both in the domestic and export markets.

“We have in the past pointed out time and again that the very task of collection this excise duty from the highly dispersed and mostly tiny units in the garment sector would be a formidable one for the government, especially when the rest of the value chain remains exempted and therefore traceability is a serious issue. The large number of small and tiny units in the sector will also find it impossible to follow the procedures involved. The result will be that evaders will prosper and compliant units will suffer. As we have emphasized before, the revenue for the government from this decision will be negligible, whereas the problems that it would create for the industry will be huge,” he said.

As it is, the industry is going through a rough patch, with the onslaught of online companies with their high discounting, and the somewhat sluggish sentiments of the market. This imposition will worsen the situation.

The introduction of the Rs. 1000 cut off price point for the applicability of excise duty will further complicate and impact the industry.

“By this single move, the government is once again encouraging the mushrooming of small, under-productive, dated manufacturing units, producing questionable quality and veering towards the unorganized sector,” Mehta said.

It is also crucial to note that the current period is seeing a lot of exporters, hoping to offset their slowdown in global markets, making an entry in the domestic sector. Their efforts would again hit a roadblock, CMAI president regretted.

“Through your good offices and influential intervention, CMAI would like to urge the finance minister to withdraw this excise duty and continue the optional duty regime that applies currently, until GST is introduced,” Mehta added.

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