CMAI’s pre-budget memorandum for garment industryTuesday, 28 February 2012
domestic textile and garment industry is estimated at Rs 1,50,000 crores and has grown at an annual rate of 14 per cent since 2007. It provides direct employment to about six million people, after the removal of SSI Restrictions in 2003, the organized sector’s share has grown to about 27 per cent (Rs 40,000 crores) largely driven by the penetration of organized retail.
A high degree of growth is expected on account of rising disposable incomes, growing consumer class and advent of international brands in the Indian market, which would increase the level of consumption. The domestic market size is expected to reach Rs 3,00,000 crores by 2017 creating direct employment opportunities for more than seven million people. But currently there are hindrances to growth such as excise duty on branded apparels, R&D expenses on sampling costs and so on.
In its appeal, the CMAI has sought measures to deal with the various issues faced by the domestic textile and apparel industry. Citing excise duty imposed on the garment industry as untimely when the industry is already suffering due to macro-economic factors like inflation and borrowing costs and industry specific factors like rising raw material and labor costs, CMAI has asked for immediate removal of the excise duty or reduction it by 1 per cent level in line with 130 other items.
It has requested for the extension of benefits under Section 35 (2AB) of the IT Act beyond March, 2012 that allows a deduction of 150 per cent of the expenditure incurred on in-house R&D facility by any company engaged in the business of manufacturing or production of any article or thing specified in the 11th Schedule. It also wants the sampling costs be considered as a part of R&D expenses and allow for necessary deduction on the same.
CMAI has urged for a pan India anthropometric research to study and analyze sample size determination and data collection, algorithm/software development and data analysis, testing and validation of software output, arriving at a size chart and sharing results with the industry. Apart from this, an appeal has also been made to establish a Centre of Excellence or Product Innovation Centre to assist in design and style intelligence, product development, and design development. CMAI also wishes to undertake activities to promote domestic consumption such as Fashion Utsav and Fashion Yatra in the major Indian cities to create buzz and shopping extravaganza.
The memorandum also touches on subjects like modification of some existing laws in line with the changed requirements of the industry, regulation of secondhand (worn) clothing imports, credit rating facility in coordination with the banks, Export Credit Guarantee Corporation (ECGC) and entrepreneurs to help domestic manufacturers get loans at lesser rate of interest, encouragement of domestic labels, and opening up of non-food sectors for FDI till the time consensus is reached at the broader level.