Apparel Sector And The Aftermath Of Budget

The apparel sector of India is pleased with the overall budget announcement and schemes being initiated for the upcoming financial year. An overall assessment of the budget has seen positive response from the industrial sector. Finance Minister Mr. Arun Jaitley has allocated 3,350 crores for the textile industry. Apparel sector’s long requisition was also addressed in this year’s budget, with a reduction on basic customs duty made from a total of 5% to 2.5%.
Adding on to the exports-related announcements made in the budget 2016-17, Ashok G Rajani, Chairman, Apparel Export Promotion Council said, "Total additional exports of Rs 7,500 crore in 2016-17 are envisaged by the incentives announced in this Budget. In the year 2016-17, fabrics worth around Rs 1,000 crore (1 per cent of Rs 1 lakh crore) would be eligible for imports and custom duty of Rs 110 crore would be saved by garment exporters. This will give avenues for new product development. It would provide additional exports of Rs 2,500 crore in a complete year. Besides, the continuation of duty free import of trimmings and embellishments to the extent of 5 per cent of FOB would give additional garment export of Rs 5,000 crore in 2016-17.”
Another specific apparel sector highlight from this year’s budget is the focus on skill development and training, which will greatly benefit the apparel industry in more ways than one. “Skill requirement in one sector itself is so diverse as in the case of ‘Textile-Apparel Value Chain’. Textile-Apparel is the largest employment provider after agriculture. In this sector, there is need for several multi-skilling centres as Centers of Excellence, which provide a gamut of skills from “weaving to garmenting” and beyond. In the lines of china’s upgradation of “Diploma” giving Vocational Education centers in sync with the Economic policies allowing upward mobility for students to acquire degrees through a national exam, we need to encourage lateral / vertical mobility of students of vocational courses, through convergence of Higher Education with Vocational Training Programmes,” said, Dr. Darlie Koshy, DG & CEO, Apparel Training and Design Center (ATDC)
However, the increase in service tax from 14.5 to 15% will adversely affect the growth of apparel sector. Moreover, 2 % excise duty on branded readymade garments and textiles with sale price of more than Rs. 1,000 is a cause of worry for the apparel industry. The Budget has also proposed that 60 per cent of retail sale price or the tariff value be made eligible for excise or countervailing duty (CVD) on readymade garments and made-up textile articles. Previously, the tariff value for calculating excise or CVD was fixed at 30 per cent of retail sale price.