Apparel exporters demand 5% rate for all exporters under the interest equalization scheme for a period of 5 years
15July New Delhi/ Gurugram: The apparel sector has put out several demands for the next Union Budget 2024 through the Apparel Export Promotion Council (AEPC), the leading organization for promoting garment exports in India.
Shri Sudhir Sekhri Chairman AEPC said,With a full value chain and a dedication to producing high-quality, compliance-driven products, India is poised to become a major global player in the textile and apparel industry and demonstrate its prowess. The long-term strategy for programs pertaining to the apparel industry will stabilize the regulatory framework and act as a proactive measure to support the nation’s garment exports.
“This labor-intensive sector needs the right push and all the support from the Government as it holds the key to the generation of massive employment opportunities for the youth and women’s empowerment, which in turn can drive the change in the socio-economic landscape of the country,” stated Shri Mithileshwar Thakur, Secretary General of AEPC.
Here are the few top recommendations/ wish list from the government in the ensuing budget;
– AEPC requests to increase the rates under the Interest equalization Scheme to 5% for all the Apparel exporters for a period of 5 years. This will increase the apparel industry’s competitiveness in the international market.
– All types of trimmings and Embellishments should be covered under Import of Goods at Concessional Rates of Duty Rules (IGCR Rules)
– Timeframe for utilization of Trimmings and Embellishments imported under Import of Goods at Concessional Rates of duty Rules (IGCR Rules) should be extended to 1 year
– Import of courier mode shipments should also be allowed the duty free benefit under IGCR. At present trimmings and embellishments are allowed duty free under IGCR is available only for shipments done under cargo mode and not under courier mode.
– Custom duty on high-end textile machinery should be reduced. The custom duty should be brought down to zero percent for three years to enable technology upgradation. Subsequently, a high tariff wall should be raised on import of textile machinery to encourage foreign investment in textile machinery manufacturing.
– Proposal to standardize GST across the whole value chain: a consistent 5% GST for all fibers across the value chain. The final good, or clothing, is subject to a lower GST rate than the inputs used to make the man-made fabric portion (yarn and fibre). While the GST rate is 18% for fiber, 12% for yarn, 5% for fabric, and 12% for apparel valued at more than Rs. 1000, the GST rate is 5% for apparel valued at less than Rs. 1000.
– As a result, taxes accumulate at the input step. Because of the accumulation of input tax credits, the inverted tax system prevents enterprises from using their working capital. For this reason, AEPC asks for a standard 5% GST on fiber, yarn, fabric, and clothing for both MMF and cotton-based goods.
– Request to provide subsidized loans for readymade garment manufacturers who incorporate organic, locally sourced inputs and invest in green technologies
– Incentivize factories for traceability initiatives in the raw material supply chain
– Reimbursement for enterprises relocating from industrial complexes and cities to the hinterlands.
– Ask for direct tax breaks to be given to clothing producers who implement ESG and other global quality standards and compliances.
– Request for financial assistance for the promotion and branding of Made in India goods
