Garment Firms Plan Protests Against Excise.

MUMBAI: First, there was food inflation. Then, affordable housing slipped out of the reach of India's middle class. Now, it is clothing, the third in the trinity of roti, kapda aur makaan that is set to cause grief to the common man owing to the government's plan to levy 10% excise duty on manufacturers of branded garments.


India's largest clothing manufacturers and retailers, including Pantaloons, Shoppers Stop, Westside, Provogue, Pepe and Roopam have declared a nationwide bandh on March 4 and 7 protesting against the excise on readymade garments, announced in Budget 2011 on Monday. A morcha has been planned at Azad Maidan on Friday while all retail stores will down shutters on March 7.


The second largest employer in the country after agriculture with six million workers on its rolls, the clothing industry is reeling under a 100% hike in the cost of cotton yarn. The new Damocles' sword that hangs over them has prompted the ordinarily fragmented industry to close ranks. "Contrary to popular impression, branded garments are not just the kind you buy at high-end stores. Once the excise duty is implemented, not only shirts and trousers, but each item of clothing, even vests and undergarments sold on the pavement that carry either a name, logo or symbol, will become more expensive," Rahul Mehta, president, Clothing Manufacturers' Association of India (CMAI), said.


Mehta wondered about the need to levy fresh excise duty especially when the government planned to introduce an all-encompassing goods and services tax (GST), albeit not in 2012, as it had announced before.


Kishore Biyani, chairman and managing director, Pantaloons, said, voices the frustration of his fraternity. "The tax will sound the death knell for India's garment industry." he said. "Already, input costs have gone up. How can the aam aadmi bear an overall increase of 30% that will result from this move?Each garment has some marking or brand and every price point will be impacted by this." "In fact, the authorities have tried to levy the tax on two previous occasions, but the move fell through as the clothing sector is so vast and varied it was impossible to cover," Mehta said.


Roopam owner Viren Shah, who heads the Federation of Retail Traders' Welfare Association (FRTWA), said the move amounted to discouraging indigenous manufacturing units and exporters, and instead encouraged import.


Industry leaders also pointed to harassment by government officials. "Excise will hinder the path to a level-playing field It will further widen the price disparity between the organized and unorganized sectors, prompting wrong elements to enter the industry and evade taxes," they said.

Source : timesofindia.indiatimes.com