AEPC feels the apparel industry was looking forward to a simplified tax regime under GST, with a single rate for the entire value chain, but that the multiplicity of rates announced will lead to interpretational issues.
For instance, while the cotton value chain was largely under the zero duty route, the introduction of five per cent tax would lead to an increase in production cost.
AEPC also says the 12 per cent rate for readymade garments above Rs 1000 is higher than the industry expectations. “Readymade garments are the historic growth engine of this industry and the maximum employment generator as well,” says Ashok Rajani, chairman, AEPC. “We hope that the government takes care of this segment’s interest by continuing with ROSL and the drawback rates.”