Look­ing Ahead with Hope!

De­cod­ing the Ex­pec­ta­tions of the Ap­parel In­dus­try from the Union Bud­get 2018

Apparel - - FRONT PAGE -

The last Union Bud­get of In­dia was all about broad growth across the var­i­ous sec­tors of the econ­omy. It was drafted tak­ing into ac­count needs in the af­ter­math of de­mon­eti­sa­tion, in ad­di­tion to the over­ar­ch­ing strate­gic needs for In­dia’s rise as an eco­nomic su­per­power. With a quar­ter of in­vest­ments di­rected towards the fund­ing of the ru­ral, agri­cul­tural and al­lied sec­tors, it pre­sented an en­cour­ag­ing pic­ture of de­vel­op­ment, while low­er­ing the in­di­vid­ual tax rate for a ma­jor­ity of the con­sumers. This com­bi­na­tion of fea­tures gen­er­ated a gen­er­ally favourable con­sen­sus towards the bud­get. How­ever, it made no new or sig­nif­i­cant pro­pos­als for the ap­parel and tex­tile in­dus­try in par­tic­u­lar.

This wasn’t sur­pris­ing for many in the in­dus­try since the govern­ment had al­ready an­nounced the R6000 crore pack­age in 2016. At the time, the Goods and Ser­vices Tax im­ple­men­ta­tion was still months away and the op­ti­mism over its ef­fec­tive­ness seemed ob­vi­ous, es­pe­cially, given the govern­ment's strong as­ser­tion with re­gards

to its im­me­di­acy. Given the seem­ingly tem­po­rary cash crunch in the in­dus­try, the roll out of the GST was not pre­dicted as a further in­con­ve­nience. How­ever, this pre­dic­tion proved false. The GST re­form came into ef­fect with much fan­fare, but also an equally prom­i­nent dis­course of crit­i­cism from con­sumers and busi­nesses alike. So, as the next year’s bud­get brings its dis­cus­sions and plan­ning, we are again mired in spec­u­la­tion. We at­tempt to set aside wan­ton spec­u­la­tion and present a level headed anal­y­sis of the cur­rent state of the ap­parel and tex­tile in­dus­try, while con­sid­er­ing what can be rea­son­ably hoped for, given the track record so far.

GST RE­LIEF AND RE­VI­SION

The 2018 Union Bud­get will be the first bud­get to be re­leased af­ter the im­ple­men­ta­tion of the Goods and Ser­vices Tax. It is no sur­prise then that a sig­nif­i­cant com­po­nent of the bud­get is ex­pected to re­volve around the con­se­quences of that re­form. It is im­por­tant to re­mem­ber that even though the GST was im­ple­mented in July, the ear­lier bud­get car­ried Cus­toms Duty, Cen­tral Ex­cise and Ser­vice Tax as the pro­jected tax rev­enue. How­ever, not this rev­enue stream is clas­si­fied un­der the GST and with the bud­get re­clas­si­fy­ing rev­enue in­takes. The next Bud­get will in­clude a new clas­si­fi­ca­tion for rev­enues pro­jected as ac­crued un­der GST, pos­si­bly un­der two ac­count­ing pe­ri­ods of April-June for ex­cise, Cus­toms and Ser­vice Tax, and July-March for GST and Cus­toms Duty. In this re­gard, the up­com­ing bud­get will no longer out­line the pro­pos­als to do with Ex­cise and Ser­vice Tax since they would be man­dated by the GST Coun­cil. Only di­rect tax pro­pos­als, i.e., Per­sonal In­come Tax, Cor­po­rate Tax and Cus­toms Duty are ex­pected to be in­cluded in the 2018 Bud­get.

Be­yond the pre­dictable changes men­tioned ear­lier, there has also been a ref­er­ence, how­ever obliquely, from the Fi­nance Min­istry with re­gards to the GST it­self. It is no se­cret that the GST im­ple­men­ta­tion has re­ceived a con­tro­ver­sial re­ac­tion from many. From the reg­u­lar con­sumer who has found re­tail­ers hik­ing up prices to busi­nesses who have strug­gled to make sense of the new reg­u­la­tions. Even the se­lec­tion of tax­a­tion slabs has seen re­vi­sions from the govern­ment in re­sponse to pop­u­lar out­cries. In this con­text, the need for a more thor­oughly re­vised and re­worked GST pol­icy is be­ing con­sid­ered. The Min­istry has made over­tures propos­ing a ra­tio­nal­i­sa­tion of the rates as be­ing sim­pli­fied un­der three slabs, from the ex­ist­ing five slabs of zero per cent, five per cent, 12 per cent, 18 per cent and 28 per cent. These changes are pro­posed for an un­de­ter­mined time in the fu­ture, but spec­u­la­tion ap­pears to be that this could be un­der the up­com­ing tax bill. Al­ready,

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.