The Apparel Export Promotion Council (AEPC) demanded tax benefits like increased interest subsidies and uniformity in GST on Wednesday to boost domestic manufacturing and India’s exports abroad.
The AEPC has also asked for tax exemptions for clothing producers who adhere to international quality standards and other environmental, social, and governance (ESG) requirements. The council also asked for monetary assistance for the branding and marketing products made in India.
The council claims that manufacturers, not Micro, Small, and Medium Enterprises (MSME) exporters would now pay interest equalization rates on pre- and post-shipment export loans that are reduced from 3 to 2%.
The exporting community has been severely hampered by the high cost of capital. To boost the garment industry’s competitiveness in the global market and provide them with access to operating capital, AEPC has asked the government to raise the rates under the plan to 5% for all apparel exporters.
Regarding GST, it stated that a consistent tax of only 5% should apply to the entire MMF (Man-Made Fibre) value chain, which includes fiber, yarn, and fabric. At present, the MMF GST rates for fabric are 5%, yarn is 12%, and fibre is 18%. The council claimed that as a result, MSME businesses are having issues with liquidity due to unused input credit.
It also suggested that the government include trimmings and embellishments by the Import of Goods at Concessional Rates (IGCR) tax guidelines.
The activities engaged in the garment export trade typically require a variety of high-quality trimmings and decorations (belts, buttons, labels, stickers, linings, inter-linings, etc.) to provide the necessary functionality and aesthetics of clothing in the global market.
To safeguard their brand image, international clients rely on maintaining consistency and quality and refraining from using counterfeit goods. It said that the shipment will be rejected if there were any deviations from the quality and specification.
It stated that as of the right moment, some embellishments and trims are not free from duties.
Furthermore, it has advocated for the IGCR laws, which control the import of trimmings and accessories, to allow for a minimum of 10% waste through appropriate notice. This would let apparel exporters submit their consumption data on time and complete the bond at the customs release.
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