Siga voices concern over excise duty speculations

The latest buzz about the return of excise duty on branded garments is worrying the domestic apparel industry. South India Garment Association (Siga) has said that though various schemes, incentives and subsidies have been given to the garment sector to develop manufacturing and create jobs,

by bringing garment sector under the excise duty may downsize the garment industry and lead to unemployment. “Also while we are heading towards GST regime, re-introduction of excise duty on garments may lead to huge confusion and great fall and downsize the garment manufacturing sector,” says Anurag Singhla, Honorary Secretary of Siga.

In 2004 excise duty was removed after it made a deep negative impact on garment trade and industry. Excise duty was reimposed by the then Finance Minister Jaswant Singh in 2002, which was removed by P Chidambram in 2004, the next Finance Minister, keeping the negative impact it made on the apparel industry. Detailing the woes, industry faced during the two years of excise regime, Singhla says, “Garment industry suffered deep impact and many small & medium garment manufacturers closed businesses leading to huge un-employment especially among women. Again in 2011, Finance Minister, Pranab Mukharjee re-imposed excise duty but within one year in next budget in 2012, government was forced to roll back the excise duty.”

Both the time delegation headed by leading associations met the Union Finance Department and Textile Department to discuss problems faced by the garment manufacturing industry, nature of fashion driven industry, complexities of excise law amendments, while appealing for modifications in excise law for the garment sector.

According to Singhla, there is no definition of branded garments underlined by the government. “Merely attaching a label does not make a piece of garment a branded one,” he says, adding “A men’s shirt of MRP 250 with label falls under excise net, while a ladies salwar suit or other outfit worth Rs 2000 without a label or without brand name does not fall under the excise duty net. Such a definition leads to unhealthy business practices.”

He further pointed out that the government is aware that garment manufacturing is one of the most labour intensive sectors and there is huge opportunity for employment. “Our neighbouring countries specially Bangladesh has encouraged garment industry and to an extent is ahead of us posing a threat to our industry. Bilateral trade treaty with Bangladesh may result in shifting manufacturing activities to neighbouring countries like Nepal, Sri Lanka, Thailand and Bangladesh resulting in considerable reduction in garment manufacturing, which means reducing jobs in the domestic industry,” Singhla adds.