Garment makers, retailers unhappy with partial tax rollback

Garment makers and retailers, who have been demanding rollback of 10% excise imposed on branded apparels, were today left disappointed by a partial tax concession given by Finance Minister Pranab Mukherjee.

"Very disappointing," Clothing Manufacturers Association of India (CMAI) President Rahul Mehta told PTI, while reacting to the announcement made by the Finance Minister to reduce excise duty on readymade garments and other textiles articles from 60% of the retail price to 45%.

CMAI, which had gone on strike earlier this month against the proposals made in the Budget 2011-12, especially demanding the rollback of 10% excise duty on branded apparels, said Mukherjee's move failed to address the bigger issues.

"Since it has only tinkered with the rates and not addressed our major concerns particularly that of spiralling costs of raw materials and futility of introducing a new tax one year before GST rolls out," Mehta said.

Echoing similar sentiments, Future Group Director and CEO (Retail) Rakesh Biyani said: "The industry is largely disappointed by the minimal concession, which only addresses the margin and discount structure of the garment industry."

Biyani said the incidence of tax that will have to be passed on to consumers, will continue to be high, even after the concession offered.

To protest the imposition of 10% excise duty on branded apparels, around 10,000 retail stores, including Shoppers Stop, Pantaloons, Westside, Lifestyle, Madura Garments and Arvind Brands had also observed one day of 'shutter down' on March 7.

"The finance ministry should re-consider the appeal of the garment industry to continue with the optional scheme of zero excise duty when no Cenvat Credit is claimed alternately garments should be considered  as "products" in transition & a nominal excise duty of one% should be charged," Biyani added.