Garment units in a fix due to excise levy

“Pranabda has not been fair with us. I used to get Rs 80-100 per day. But because of him, I was unable to earn even a single penny in the last two weeks,” says Ranjit Pal, a 51-year-old daily labourer from Howrah in West Bengal.

Pal may not know what excise duty is, but he does know that it is because of Finance Minister Pranab Mukherjee’s economic policies that thousands of hosiery and readymade garment manufacturers are out on the streets. “We have to support our babus in this strike,” he added.

Demanding a rollback of the 10 per cent additional excise duty imposed on hosiery and readymade garment manufacturers in the 2011-12 Budget, the industry bodies have gone on an indefinite strike across the country. According to them, the strike is causing a loss of more than Rs 150 crore a day and the industry is facing the threat of cheap duty-free products from Bangladesh.

“If the government goes ahead with the decision we will be compelled to increase our prices. Since India has a treaty with all the SAARC countries for duty-free trade, goods from those nations will be sold in our country at a much lower price than garments made here. From Bangladesh alone, 16 million pieces are allowed duty-free access in India,” said Sreemoy Banerjee, president of the Bengal Hosiery Manufacturers Association.

“For a cottage industry like us this is a burden. We are compelled to increase prices by at least 50 per cent,” he added.

According to the Federation of Hosiery Manufacturers Association of India, more than 350,000 units across the country, which employ close to 10 million people, are directly affected by the government decision. “Technically speaking, we manufacturers have not sold even a single garment from West Bengal after the Budget. Nobody has taken registration from the excise department till now,” said Jay Varma, one of the manufacturers on strike.

The problem is much deeper in rural India, since 80 per cent of the industry, which is the second largest employer in the country, is in the unorganised sector.

During the past year cotton prices have gone up by 150 per cent, and yarn by 100 per cent, putting additional pressure on the industry. “In West Bengal alone more than 50,000 units were closed due to shrinkage in demand arising out of high prices caused by high input prices and excise imposition,” Banerjee said.