Central Budget Again Hits Branded Readymade Garments and Made-Ups: CMAI
Mr Rahul Mehta, President of the Clothing Manufacturers Association of India (CMAI), Mumbai, has expressed anguish at the way the Central Budget presented in Parliament has hit the readymade garments and made-ups segment of the textiles industry. In a statement issued, he recalled that introduction of duty on finished products, while sustaining the exemption for upstream products, was an experiment implemented a few years back by the previous Government and withdrawn subsequently when the disastrous consequences were understood. Repeating that experiment is the last thing that the industry needed, especially when the entire textiles and clothing industry in the country is already going through a crisis because of demand recession, both in the domestic and export markets. Mr Mehta pointed out that the very task of collecting this duty from the highly dispersed and mostly tiny units in the garment sector would be a formidable one for the government, especially when the rest of the value chain remains exempted, and therefore, traceability will be a serious issue. The large number of small and tiny units in the sector will also find it impossible to follow the procedures involved. The Mr Rahul Mehta requested the Finance Minister to withdraw this duty and continue the optional duty regime that applies currently, until GST is introduced. He pointed out that once GST is introduced, the whole value chain will be covered by duty and traceability as well as compliance will improve tremendously and implementation problems will also ease considerably. It is also crucial to note that the current period was seeing a lot of exporters, hoping to offset their slow down in global markets, making an entry in the domestic sector. Their efforts would again hit a roadblock. According to Mr Mehta, the imposition is all the more surprising when the Finance Minister rightly emphasised in his speech the importance of Job Creation and the ‘Make in India’ thrust. Textile is the highest employer after agriculture, and hence, it is indeed ironical that new taxes are being levied on such an Industry. As it is, the Industry is going through a rough patch, with the onslaught of online Companies with their high discounting, and the somewhat sluggish sentiments of the market. This imposition will worsen the situation. result will be that evaders will prosper and compliant units will suffer. He added that the revenue for government from this decision will be negligible, whereas the problems that it would create for the industry will be huge.