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01-March-2016

Prices of branded garments are set to go up by “2 to 5 per cent” with the centre levying excise duty on ready-made products of Rs.1000 or more in the Union Budget for 2016-17.

While presenting the Budget, finance minister Arun Jaitley said, “I propose to change the excise duty on branded readymade garments and made up articles of textiles with a retail sale price of Rs.1000 and above from 'Nil without input tax credit or 6 per cent/12.5 per cent with input tax credit' to '2 per cent without input tax credit or 12.5 per cent with input tax credit'.”

The garment industry in Punjab described the levy as “most deplorable” step and said that prices of ready-made garments will go up in the range of 2 to 5 per cent.

Condemning the government for bringing small and medium enterprises engaged in garment manufacturing under the ambit of indirect tax, industry questioned the rationale behind the move when the centre was pushing for bringing Goods and Service Tax (GST) from next fiscal.

“Prices of ready-made garments will go up in the range of 2 to 5 per cent depending upon the retail price of the product,” Ajit Lakra, head textile, Federation of Industry and Commercial Organisation has said.

“We strongly condemn this move of the finance minister as it will hurt small and medium size industries which are manufacturing garments for big brands,” Lakra, a Ludhiana-based garment maker said. Sandeep Jain, executive director, Monte Carlo Fashion also dubbed the levy of excise duty as “negative move” for the garment industry.

“When the consumer sentiments are already low, the levy of excide duty will further hit the demand for items priced more than Rs.1000,” he said. Price rise would hit customers who mostly purchase garments between price range of Rs.1000 and Rs.2500, industry felt.

“Rather than imposing tax, the government should have announced some liberal steps for the promotion of labour intensive industry and employment generation. It will be small and medium scale garment makers who will have to face complexities pertaining to excise duty laws. This move came when the government is pushing for GST and it is quite unfortunate,” Lakra added.

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