Apparel exporters’ organization AEPC on Saturday called on the government to announce tax incentives, including removing a provision requiring payments to small and medium-sized enterprises inside 45 days to say deductions and duty relief on imports of clothing machinery.
The Apparel Export Promotion Council (AEPC) has also asked for an interest equalization rate of 5 per cent to be announced in the budget, which is scheduled to be announced on February 1 by Finance Minister Nirmala Sitharaman.
Other demands include extending preferential tax rate to latest manufacturing units to encourage the establishment of recent garment factories; simplifications in the procedure for importing moldings and decorations under IGCR (Import of products at a reduced rate); and liberalization of export procedures in e-commerce.
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“The ready-made garment (RMG) industry has also demanded the removal of Art. 43B(H) of the IT Act in the next budget which covers payment to any SME enterprises within a maximum period of 45 days to claim any tax deduction. This has resulted in an increase in tax liabilities and disrupted the cash flow of exporters,” the statement said.
She added that the e-commerce export value limit per consignment needs to be increased to a minimum of ₹25 lakh and the export execution period needs to be prolonged to 12 months.
India’s apparel export sector relies heavily on imported machinery to take care of quality and global competitiveness as domestic production is insufficient to fulfill demand.
“High import tariffs make India’s apparel exports less competitive compared to countries like Bangladesh and Vietnam. “AEPC recommends not only maintaining existing exemptions, but also reducing tariffs on remaining garment machinery to zero to increase the efficiency of the sector,” it said.
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AEPC Chairman Sudhir Sekhri said, “The Union Budget is a great opportunity to accommodate our demands for long-term political support.”
AEPC Secretary General Mithileshwar Thakur said there may be an urgent have to quickly adopt the right strategies to make the most of the evolving supply chain reorientation.
“India’s apparel sector is characterized by high growth and has the potential to overtake global competitors by increasing production capacity, channeling investment into the sector, upskilling the workforce and labor market reforms,” Thakur said.
