KNITWEAR CLUB delegation meets FM, seeking roll back of excise duty

Ludhiana / Delhi, January 30, 2013: A delegation of Knitwear Club, Ludhiana led by Manish Tewari, Union Minister of State for Information and Broadcasting (IC) and Pawan Dewan, President, District Congress Committee, Ludhiana met   P. Chidambaram, Finance Minister at New Delhi on Wednesday with the request to roll back the Excise Duty on Branded Readymade garments.

While giving a patient hearing the Finance Minister assured the delegation that appropriate step would be taken to find out a suitable solution, said a release issued by the Club here this evening.

The delegation was comprised of Darshan Dawar (President), Narinder Miglani (General Secretary), Rajinder Bhushan Mani, Jaswant Takkar (Senior Vice Presidents) Ashok Makkar (Vice President) and Sudarshan Jain.

The delegates also submitted a memorandum to Finance Minister. The memorandum reads: “We may state that Knitwear Industry in Punjab holds a prominent position in shaping the economy and trade of the Country. The Hosiery Industry in Ludhiana being over one hundred years old enjoys reverence and status of mother industry of Punjab.

Knitwear Club in Ludhiana represents more than 12,000 small and medium Knitwear/Textile Units and Ludhiana Cluster plays a major role in catering to the needs of Hosiery Industry.  Inspite of capturing the rank of major revenue generator still the industry has to bear various problems like:(photo-caption:Ludhiana Hosiery delegation led by Union Minister for Information and Broadcasting Manish Tewari met the Union Finance Minister P. Chidambram on Wednesday, coming out from North Block at New Delhi.)

Excise Duty:

Today, the whole world is brand conscious and even a small manufacturer having annual turnover of rupees ten lakh is also trying to create his brand image in the minds of buyers. The customer also goes behind known brands and catchy names. So, it is the compulsion of whole garment industry to have a brand name and use it on its products to make them saleable in the market. These products are sold to retailers/wholesalers at competitive rate. Thus, levy of excise duty on goods of small manufacturers producing goods for the poor people has put a question mark on their survivals which are already fighting against increased raw-material costs, labour shortage, Power Shortage, infrastructural problems; etc. irrespective of the brand value of their products.

The main raw material of garment industry is yarn. There is an optional excise duty on the yarns under Notification (No. 30/2004-CE) dated July 9, 2004 as amended and which is retained in Union Budget 2011-12. Almost all the manufacturers/ traders of yarns are not registered with central excise department as have not opted for excise duty scheme. In such a situation, there is no cenvat credit available on main raw-material of our industry resulting that whole new levy of excise duty @ 12.36% directly adds to cost of our finished goods. In the wholesale market, MRP system is not being followed and is not possible to enforce MRP system.

This has resulted in increase in cost of branded garments and made ups textiles by more than 12.36%. In such a case, if the industry increases its price of goods, the products becomes non-competitive in the market in comparison to manufacturers availing SSI exemption benefit under Notification (No. 8/2003-CE) dated March 1, 2003 as amended in respect of clearances of branded goods up to Rs. 1.50 crore. Thus problem is further aggravated by the cheap import from China & Bangladesh.

To avoid closure of units, these units will either have to reduce their sales below Rs. 1.50 crore or to start job-work only for big brands houses. This will result in negative growth of small industry and huge un-employment and government will not be able to reap any benefit from such levy.

Here we request you to roll back the Excise duty and evenyou assured during your previous tenure as Finance Minister not to impose the excise duty until the implementation of GST.

We hope you will consider this matter to protect the survival of the industry.”

Meanwhile, a report from New Delhi said: “Information and Broadcasting Minister Manish Tewari today led a delegation of Ludhiana knitwear manufacturers to Finance minister P Chidambaram to express the hosiery sector's concerns related to imposition of excise duty on branded garments.

"We met regarding an issue from our area. The hosiery industry had an exception from central excise from 2004 to 2011. In the 2012, excise duty was imposed which has created burden on this sector," Tewari told reporters after he emerged from the meeting.
"Since Ludhiana is considered the hub of hosiery production, it was felt that what everyone feels should reach the finance minister, because the budget will come soon. And all of us should take our thoughts to the finance minister and hope that he will take cognizance of the concerns," he said.
Tewari who represents the Ludhiana seat in the Lok Sabha.

Narinder Miglani, who accompanied Tewari to the finance minister said that the imposition of excise as per existing rules was hurting the industry in view of the cheap imports that are coming from China and Bangladesh.
Miglani also said that since the policy is to levy excise on branded clothes, all clothes which have labels are considered fit for levy of excise duty and it includes those products also which are made for the poorer sections of the populace.