Garment makers seek withdrawal of 10% excise duty

CMAI, association of retail brands like Shoppers Stop, Pantaloons and Globus, today asked the government to withdraw the excise duty of 10% levied on readymade garments as it would hurt small manufacturers.

"Revenue Secretary Sunil Mitra promised the garment manufacturers to find a way out," CMAI Executive Director Mohan Sadhwani told PTI.

Members of the Clothing Manufacturers Association Of India (CMAI), an apex body of over 20,000 companies in the country, including readymade garment manufacturers, exporters, retailers, earlier in the day met Mitra demanding roll back of the levy on garments.

Finance Minister Pranab Mukherjee in Budget 2011-12 proposed a mandatory 10% duty on branded garments.

Sadhwani said, "We are comfortable with optional excise duty, but the mandatory scheme will adversely affect the small manufacturing units".

The provision was aimed at bringing the branded readymade garments under the excise net. Earlier, the excise duty on branded apparel was voluntary. But henceforth, the branded apparel manufacturer will have to compulsorily pay the excise duty of 10%.

In view of the proposed duty, CMAI initiated a nationwide protest in the national capital, Mumbai, Kolkata and other parts of the country.

The association also approached many organisations and garnered the alliance of Gujarat Garment Manufacturers Association, Federation of Hosiery Manufacturers Association of India to press for withdrawal of the duty.

Sadhwani said the duty will bring more fragmentation in the industry, as manufacturers will split their units to get excise duty exemption.

On cost of the finished product, Sadhwani said, "This move will automatically raise the MRP on a basic commodity, which will increase the cost of fabric by 30% for the manufacturer and overall cost of the product will jump by 40-45%.