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ISSUES
RELATED TO THE DOMESTIC SECTOR
1.
Import Duty on Capital Goods
Currently,
import duty on garment machinery is 5% + CVD + Education
Cess (Normal + Special). The technology is changing fast
as even three-year old machines are considered obsolete.
Modern technology not only improves the quality of the
garments but also helps to reduce cost and for India to be
cost-competitive.
Submission:
Industrial garment machinery including machinery required
for inserting accessories like zippers, welcro etc. should
be exempted from CVD as well as Education Cess. In fact,
it would give a boost to modernization if industrial
garment machinery is totally exempted from any customs
duty.
2.
CST & `C` Form
The
industry was promised that CST would be NIL by 2008. So
far, it has only been reduced from 4% to 3%. For an
up-country sales, a manufacturer / dealer has to produce a
`C` Form which is available with the corporation offices.
It is unfortunate that these forms are available only at a
price.
Submission:
Manufacturers/Dealers should be permitted to type the
exact wordings of the `C` Form on their respective
letterheads to be signed by the Buyer/Seller. Such forms
be accepted by the corporation as evidence of up-country
sale.
3.
GST
Every
Finance Bill carries a dose of tax on industry – either
on business or on service. Some of these even overlap like
cargo handling service and part service. With a view to
amalgamate all these into a single tax, the industry was
promised a `Goods & Service Tax` (GST).
Submission:
Immediate implementation of GST.
4.
Research & Development Expenses : IT Tax Deduction
As
a fashion-oriented garment industry, it has to spend
considerable sum of money on product development, design
development, fabric innovation and sampling.
Submission:
With a view to encourage the industry on these lines, the
industry may be allowed 150% of its expenses on research
and development, subject-to a maximum of 5% of the annual
turnover of the unit as certified by a Chartered
Accountant.
5.
Ban on Imports of Secondhand Clothing
Taking
advantage of low rates of import duty levied on `weight
basis` (instead of on a `per piece basis` as is the case
for normal imports), second hand clothings are sold on
footpaths of metros posing a serious challenge to domestic
production. This not only results in serious loss of
revenue for government but also encourages dumping of
garments into the country by own institutions.
Submission:
A complete ban on imports of `secondhand` (Worn) clothing.
This will not only protect government revenue, but also
protect employment in the entire textile chain. India
produces sufficient garments not only for domestic needs,
but also to clothe the world.
ISSUES
RELATED TO THE EXPORT SECTOR
1.
Continuation of the 4% Interest Subvention Scheme under
TUF
The
Budget presented by the Hon`ble Finance Minister on Feb.
29, 2008, discontinued the interest subvention granted
under the TUF Scheme. This withdrawal has raised the cost
of borrowing and has proved detrimental to modernization
in the garment industry.
Submission:
Restoration of the 4% Interest Subvention Scheme and
availability of adequate funds to banks to enable them to
implement the scheme.
2.
Removal of Drawback Caps for Value-Added Exports
Caps
in the duty drawback schedule, compel exporters to export
only low-value items. While the entire global trade is
moving towards value-added products, this policy adopted
by Govt. of India violates against export of value-added
products.
Submission:
To remove drawback caps in the drawback schedule in the
interest of increasing exports for India.
3.
Special Duty Free Licences for Import of New
Fabrics/Trimmings
Certain
Fabrics/Trimmings are not manufactured in India or if so,
not in sufficient quantity. Examples are linen, ramie,
wool, silk, artificial jewels, lycra etc. Such
Fabrics/Trimmings raise the value of the garment. However,
they also raise the cost of manufacture, when imported and
there is a considerable time-lag between receipt of an
export order and the inclusion of the raw material or
trimming in the SION List.
Submission:
With a view to cut short this time-lag and to cut
production costs, the import of such fabrics should be
permitted duty-free at the rate of 1.80 mtrs./per trouser
(100` width) or 3.50 sq.mtrs. for a full-length garment (
upto the knee ), under SION scheme. Similarly, trimmings
like artificial jewels, etc. should be allowed duty-free
on a one-to-one basis under the SION Scheme.
4.
Focus Product Scheme - Inclusion of Silk / Woollen
Garments:
This
new scheme introduced in EXIM 2006, should be made
available for export of garments from Yarn/Fabric of
Silk/Wool/Jute etc. Currently, production hardly exceeds
4% to 5% in volume for these garments.
Submission:
Scheme should be made available against exports of Silk/Woollen
garments also. This will add variety to garment export
basket which is today heavily weighted in Cotton/Synthetic
etc.
5.
Focus Market Scheme - Inclusion of Other Markets :
This
was introduced in Exim 2006. The scheme should be extended
to cover all markets where export performance is 5% or
less of the total volume of exports.
Submission:
Scheme should be made available for export of garments to
all countries of the world where export performance is 5%
or less of total volume of exports. This will help to
broaden market-base, rather than restrict a majority of
garment exports only to EU/USA/Canada.
Source
: Myiris.com - Mumbai, Maharashtra, India, dated
19/01/2009
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