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`1 pc cess will help garment units, Govt'

Our Bureau

NEW DELHI, April 10

THE Action Group for Removal of Excise on the Garment Industry (AGREGI) today claimed that an impost of a one per cent cess on the turnover of the woven garments industry would provide a win-win situation for both the Government and the domestic garment industry.

Stating that the continuation of excise duty on registered branded garments would be ``suicidal'' for the domestic industry, Mr Rahul Mehta, Convenor, AGREGI, told newspersons here that the alternative suggested by the action group would help the Governm ent garner more revenues and at the same time spread the burden among a wider section of the industry.

``We are suggesting that this one per cent textile committee cess be imposed across the board on the entire industry which were involved on manufacture of woven garments (not knitted garments). Currently, the excise duty of 16 per cent is imposed only on registered branded garments,'' he said.

Mr Mehta also said that such a move would do away with ``artificial categorisations'' such as ``branded or unbranded; registered or unregistered'' and simplify the collection of duty.

``The contention of the Government officials that the excise duty impost was intended at bringing the large registered branded players into the tax net may not be true as the people who are registered are small people. Many of the biggest brands are rece nt entrants. They fall under the category of `applied for registration' and are therefore out of the purview of excise,'' he said.

Mr B.S. Nagesh, Managing Director, Shoppers Stop Ltd, pointed out the Government was placing restrictions on the growth of the domestic industry even while taking all efforts to integrate the industry with the global economy.

Mr Shanti Shah, ex-Chairman of the Apparel Export Promotion Council, said the contention of a section of the Government that the imposition of excise duty would also act as a check on surge in imports was not acceptable. ``The question of countervailing duty would come only when registered branded garments are imported. No countervailing duty would be applicable if one were to import unbranded garments,'' he said.

He pointed out that a number of investors who were keen to set up large garment manufacturing units after the dereservation of the industry, were now hesitating in view of the 16 per cent excise impost on registered branded garments.

``After 2004, the distinction between domestic and exports markets will be eliminated. If India is going to maintain 16 per cent excise duty, this will only be an unnatural barrier and encourage more imports. We have to make a choice -- do we want our ga rments industry to go the way of the domestic toys industry,'' Mr Shah said.

Pic.: Mr B.S. Nagesh, member, AGREGI (right) with Mr Rahul Mehta, Convener, addressing a news conference in New Delhi on Tuesday.

Picture by Ramesh Sharma