Budget 2016-17 will hit garment industry
Prices of branded garments are set to go up by "2 to 5 percent" with the Union government levying excise duty on readymade products of Rs 1,000 or more in the Budget 2016-17. Union Finance Minister Arun Jaitley said, "I propose to change the excise duty on branded readymade garments and made up articles of textiles with a retail price of Rs 1,000 and above from 'Nil without input tax credit or 6 percent/12.5 percent with input tax credit' to '2 percent without input tax credit or 12.5 percent with input tax credit." Welcoming the Budget, Chairman of AEPC, Ashok G Rajani termed it-balanced, growth oriented and forward looking. He said, "The thrust on boosting the manufacturing, skill led employment and infrastructure will surely provide boost to the garment industry." Chairman AEPC in reaction to the Budget 2016-17, stated that, "Addition of 1 percent FOB value of exports in custom duty free for specified fabrics would enable garment exporters to undertake production of those garments where they were not competitive. In the year 2016-17, fabrics worth around Rs. 1000 crores (1 percent of Rs. 1 lakh crore) would be eligible for imports and custom duty of Rs. 110 crores, would be saved by garment exporters. This will give avenues for new product development. It would provide additional exports of Rs. 2500 crores in a complete year." Rajani further said, "Continuation of duty free import of trimmings and embellishments to the extent of 5 percent of FOB would give additional garment export of Rs. 5000 Cr in full year (2016-17)." "The effect of this would be additional 0.03 percent drawback on service tax on garment exports on FOB value of exports. The total additional exports‚?? Rs. 7500 Cr in full year 2016-17 is envisaged by the incentives announced in this budget," he added. Courtesy: SME Times.