Garment makers to go on strike to protest 10% duty

Garment manufacturers have decided to go on a nationwide strike to protest against the imposition of 10 per cent excise duty introduced in the Union Budget. While companies located in North India went on an indefinite strike from Thursday, units located down South will stall operations from Friday.

Finance Minister Pranab Mukherjee had earlier proposed to levy 10 per cent excise duty on 60 per cent of the MRP of branded apparel. But, even with a partial rollback announced on Tuesday, when the FM said that the 10 per cent excise duty will be levied on 45 per cent of the MRP, garment makers are not amused

Mukherjee had also proposed to enhance the abatement from 40 per cent to 55 per cent of the retail sale price.

Unhappy with the ministry’s decision, textile associations across the country unitedly voiced concerns over these “piecemeal measures while larger issues remained unaddressed” and announced an indefinite strike.

The garment manufacturers’ associations under the umberella of FOMA (Federation of Hosiery Manufacturers Association of India) has been trying to convince the policymakers about the consequences of the new ad valorem tax.

All India Hosiery Association President K B Aggarwal said hosiery units have gone for an indefinite strike starting on Thursday. The revenue loss per day, according to Aggarwal, will be to the tune of Rs 300-400 crore.

He said that the prices of finished products have already moved up by 60 per cent due to a hike in yarn prices and the imposition of excise duty will further increase the prices by 13-14 per cent.

Several textile association members have been lamenting that since the government was all geared up to roll out GST within the next one year, there was simply no logic in forcing the industry to adopt the excise laws for one year and then adopt a new set of GST rules from the next. “This industry isn’t managed by professionals who can cope with this annual change of rules,” an industry insider said, requesting anonymity.

The members said the excise duty was earlier imposed in 2003 as well, but in 2004 while withdrawing the excise duty, P Chidambaram, the then FM had clearly said in his Budget speech that the move was to address the need of a “fragmented and decentralised” industry that was not capable of handling complex tax structures.

Chamber of Knitwear and Textile Associations of Ludhiana President Ajit Lakra said the pan-India indefinite strike by textile associations will definitely affect governemt calculations.

Revenue of Rs 4,000 crore is estimated to be generated by levying of excise duty on branded garments. However, Lakra feels the revenue target would not be met if the strike persists for a while.