Apparel Exporters Seek Tax Incentives In Budget To Boost Shipments

New Delhi: Apparel exporters body AEPC urged the government to announce tax incentives, including the removal of a provision requiring payments to MSMEs within 45 days to claim deductions and customs duty exemption on garment machinery imports on Saturday. The Apparel Export Promotion Council (AEPC) has also requested that an interest equalization rate of 5 per cent be announced in the Budget, scheduled to be unveiled on February 1 by Finance Minister Nirmala Sitharaman. Other demands include an extension of the concessional tax rate for new manufacturing units to encourage the setting up of new garment units simplification in the procedure of imports of trims and embellishments under IGCR (Import of Goods at Concessional Rate) and liberalizing e-commerce export procedures.

"Ready Made Garments (RMG) industry has also demanded removal of Sec43B (H) of IT Act in the ensuing Budget, which pertains to payment to any MSME companies within a maximum 45 days' time to claim any deduction in tax. This has increased tax liabilities and has disrupted the cash flow of exporters," it said in a statement. 

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It added that the cap per consignment of export value under e-commerce should be increased to a minimum of Rs 25 lakh, and the export realization period should be extended to 12 months. India's garment export sector relies heavily on imported machinery to maintain quality and global competitiveness, as domestic production is insufficient to meet demand.

AEPC seeks tax incentives to boost garment exports in Budget.

"High import duties make Indian garments exports less competitive vis-a-vis countries like Bangladesh and Vietnam. AEPC recommends not only continuing existing exemptions but also reducing the customs duty to zero on remaining garmenting machinery to enhance the sector's efficiency," it said. 

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"The Union Budget is a great opportunity where our demands for long-term policy support can be considered," AEPC Chairman Sudhir Sekhri said. On the other hand, AEPC Secretary General Mithileshwar Thakur said there is an urgent need to quickly adopt the right strategies to take advantage of evolving supply chain reorientation. "The Indian apparel sector is on a high growth trajectory and has the potential to outpace global competitors with upscaling of production capacity, channelizing investments into the sector, upskilling of workforce and labour reforms," Mithileshwar Thakur said.