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No relief likely for branded apparel in Budget
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New Delhi, January 30, 2012
Despite hectic lobbying by both the Industry and the Textile Ministries, branded garments are unlikely to get relief in the coming Budget.
The Finance Ministry is in no mood to roll back additional excise duty imposed last year. A senior Finance Ministry official said, “We have got representations from the industry, but I do not think there will be any proposal to withdraw.”
The Budget for 2011-12 made a provision for a unified rate of 10 per cent on branded garments or made-ups, while exempting garments tailored or made to order for a retail customer.
Along with the manufacturers, the Textile Ministry has written a letter to the Finance Ministry requesting to roll back the 10 per cent excise duty on branded garments in the Budget for 2012-13. It said that the industry has been strongly opposing the duty.
Costlier INPUTS
Garment manufacturers argue that demand is already low while input costs are rising, so current price levels are not sustainable.
However, Finance Ministry officials are not ready to accept this argument. They said a customer who is buying branded garments is more quality and brand conscious. He does not bother much about price, so the duty does not affect the customer's decision to buy.
“Hence there is no question of scrapping the duty as desired,” an official said. He also said that some relief has already been given. For example, the tariff value for branded garments and made-ups was reduced from 60 per cent to 45 per cent. So effectively, the company has to pay duty on less than half of the price.
Secondly, it was clarified that credit of tax paid on inputs, capital goods and input services would be available to manufacturers of these products.
Another Finance Ministry official added that the current financial situation was very tight and the Government was looking for ways to increase revenue. So any demand for withdrawal or reduction of duty would be very difficult to meet. Industry should focus on reducing costs, he advised.
Source: The Hindu Business Line
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