31 January 2023, Mumbai
The Indian apparel/garment industry is hoping the budget offers some relief.
The industry is seeing rough times due to costlier raw materials and global economic challenges. Costlier cotton is the key pain point for the Indian garment industry. On the one hand, the cost of production of garments has increased.
Also, cheaper garments are being imported into India from China, Bangladesh, and other countries. Since higher cotton prices are the main cause of concern for the entire textile industry, removing the import duty is expected to ease cotton prices.
Higher cotton prices increase garment production costs, so exporters are not in a position to offer competitive prices. Cotton imports under Advance Licence offer duty-free raw materials for exporters but they are not entitled to incentives under RoDTEP.
The industry wants GST rates for ready-to-wear items to be reduced from the current 12.5 per cent to 5 per cent since high GST rates discourage consumers from buying. Also, taxation on Employees Stock Options (ESOP) should be based on actual gains, not hypothetical benefits.
Since India’s garment export industry, more particularly micro, small, and medium units, have been affected badly due to the international market situation caused by the Russian-Ukraine war, a moratorium of a minimum of six months for the existing loan payments has been suggested. Special funding has been called for to develop labor-supportive infrastructure in clusters where labor-intensive industries like clothing/apparel/garments are concentrated.
