Garment industry observes two-day bandh against excise duty

The two-day bandh call by the garment industry in protest against the 10 per cent hike in excise duty on branded garments had a major impact across India. In Mumbai around 30,000 garment workers marched in protest raising slogans like

“No sale today”. The nationwide shut down of manufacturing units took place with the active participation of members and associations under the purview of Clothing Manufacturers Association of India (CMAI) such as Integrated Apparels Association and Northern India Hosiery Manufacturers Association etc. Small unit owners in Indore even locked up their sewing machines with chains. "We are offering the keys to finance minister who has decided to levy a 10 per cent excise duty on an industry already burdened with rising costs of raw material and multiple taxes”, said a distraught owner.

The branded garment industry is already suffering due to 100 per cent increase in cotton prices in the last one year. This coupled with a rise in prices of blended and synthetic yarns and labor cost has put a lot of pressure on manufacturers and brands alike. They are already struggling to pass on this cost to the consumers. Hence, the additional excise burden will result into a loss making situation and will ultimately cripple the industry.

"We are at pains to explain to the authorities that the indigenous industry is being sacrificed while imported garments from China and Bangladesh are being facilitated with lower import duty," says Viren Shah, President, Federation of Retail Traders Welfare Association. Rahul Mehta, President, CMAI and vice chairman of Asian Apparel Federation explains that the garment industry is already paying 4 per cent VAT. So government should remove the excise duty on garments as there is no excise and VAT on fabric. The growth rate of garment industry will be badly affected due to the levy. What’s more since GST is expected to roll out from April 1, 2012 this should be taken up along with it. “Workers not just in big cities like Mumbai, Delhi, Kolkata, Ludhiana, Indore and Chennai but also interiors could be rendered unemployed,” he adds.

During the two day bandh, marches were taken out in cities like Ahmedabad, Ludhiana, Kolkata, Tripur, Indore, Hyderabad, Bangalore etc. “This is just the start of the protest which will be further continued from March 24- 27”, said Rajiv Padwal, Vice President, Integrated Apparels Association IAA.

Mehta says they have made groups to meet various leaders and the finance minister. “I get the feeling they have realized they have not considered all the problems and issues surrounding our industry. So there may be a rethink. The CMAI wants a complete rollback. The idea is not to inconvenience consumers and that’s why we haven’t asked retailers to close shops.” The garment industry is the largest employer after agriculture and even a 10 per cent reduction in the size of the industry would lead to 10 per cent reduction in employment and put five lakh people on the streets.