continuation of the interest-equalization plan, elimination of IT Act Sec. 43B (H), Importing trims and embellishments under the IGCR (Import of Goods at Concessional Rate) process has been made simpler. The apparel industry has made several requests of the Union Budget, including the exemption of customs duties on the importation of garmenting machinery and the Green Transformation Scheme for the improvement of ESG infrastructure.
“This is a watershed moment, when India is aspiring to capture higher share in global imports of apparel due to the enhanced trust that global brands are placing on India,” said Shri Sudhir Sekhri, Chairman of AEPC, in response to the budget demand. Given that reputable international buyers, retailers, and chain shops are searching for alternatives as a result of the Bangladesh issue and China plus one factor, it is the ideal moment for the nation to take advantage of it in terms of export development. He went on to say that the Union Budget is a fantastic chance to take into account our requests for long-term policy assistance.
“We need to swiftly adopt the right strategies to take advantage of evolving supply chain reorientation,” stated Shri Mithileshwar Thakur, Secretary General of AEPC, highlighting the demands of the RMG business. By increasing manufacturing capacity, directing investments into the industry, upskilling the workforce, and implementing labor reforms, the rapidly expanding Indian textile sector might surpass its international rivals.
Important demands of the industry are summarized below:
- To counteract the high cost of capital, AEPC has asked for both the continuation of the interest equalization program and an increase in the interest equalization rate to 5%.
- To promote the establishment of new clothing units, AEPC has suggested extending the section 115AB concessional tax rate for new manufacturing facilities. In accordance with Section 115AB of the Income Tax Act, the Council has suggested a 15% concessional duty rate.
- The RMG industry has also called for the IT Act’s Sec43B (H), which deals with paying MSME enterprises within a 45-day window in order to claim a tax deduction, to be removed from the next budget. Exporters’ cash flow has been hampered and their tax obligations have grown as a result. Exporters must offer a lengthy credit period for payment since many customers follow the typical 90–180 day payment window. As a result, exporters need to be exempt from income tax 43B(h).
- It is suggested that a minimum waste of 10% be allowed and that the IGCR (Import of Goods at Concessional Rate) guideline for the import of trimmings and decorations be simplified.
- The council has asked for the export processes for e-commerce to be liberalized. These current regulations should be made simpler, the export realization time should be extended to 12 months, and the maximum export value per consignment under e-commerce should be raised to at least 25 lakhs.
- Due to limited local production to fulfill demand, India’s garment export industry mostly depends on imported garmenting machinery to maintain quality and worldwide competitiveness. Indian clothing exports are less competitive when compared to nations like Bangladesh and Vietnam due to high import tariffs. To increase the efficiency of the industry, AEPC suggests not only maintaining current exemptions but also lowering the customs charge to zero on any remaining clothing machinery.
- India must give the improvement of sustainability-related infrastructure top priority given the increasing focus on ESG compliance in important international markets, especially in the USA and the EU. The Indian government ought to implement a refinance program, like the Green Transformation Scheme, to encourage and support environmentally friendly and sustainable manufacturing. Under this plan, clothing manufacturers would be able to get long-term soft loans to acquire the equipment they need to update their green and sustainable production facilities.
