Request for abolition of excise duty on Branded Hosiery, Garments & Made Ups and maintain status quo

March 1st,2016 TO THE UNION FINANCE MINISTER LOK SABHA NEW DELHI Sub: Request for abolition of excise duty on Branded Hosiery, Garments & Made Ups and maintain status quo Respected Sir, We take this opportunity to congratulate the NDA Government on presenting a very balanced and growth oriented budget. Your focus on inclusive growth coupled with a plethora of welfare measures, incentive schemes and other benefits will go a long way in shoring up the development in the rural and semi urban areas of our country. We also appreciate the foresight with which the Government has​ ​ come out with an open mind to help the trade and industry.​ ​ While the above have brought good cheer, the Textile Industry of which Hosiery and Readymade is an integral part has been dealt a severe blow with the imposition of 2% excise duty on branded products with MRP​ of 1000 rupees and above.. We pray to you to urgently examine the matter and take up our request for removal of mandatory excise duty on products the earliest and save the industry which has come to a standstill..We would like to highlight the various reasons why we are making this earnest request to you for immediate roll back and maintaining status quo: ​1.Excise duty on readymade garments would both increase prices for consumers and put a burden on manufacturers. "The 2% duty will increase cost of garments by 5%-6% by the time they reach consumers. In many cases, manufacturers may start compromising with quality to keep retail prices below Rs 1,000 to avoid excise duty. This is likely to encourage un-organised readymade garments sector​ ​2​ . The common man's clothing need has been impacted by high inflationary trends in the last 15 months. The whole country is facing difficulty in coping with 10% food inflation, however its pertinent to know that "kapda" need of common man is under more inflation than "roti". A simple vest has seen 50% inflation, while a normal shirt has seen 30-40% inflation. In such a scenario, "aam aadmi" was looking towards the Govt for relief. However with this one move, 10-15% inflation has been further imposed over night. This tantamounts to robbing an Indian the right of affordable clothing. ​3​ . The apparel industry is the second largest employer after the agriculture industry giving​ ​ employment to nearly ​3​ crore people all over the country and about 40% of the labour involved in garments are women. The slightest change in the employment dynamics or shut down of the small manufacturing units will result in mass unemployment. We would like to stress here that the apparel industry is one of the largest employers of women in the country. In the event of units closing down, many women stand to lose their means of livelihood. 4​. While the domestic manufacturers have been levied with a 10% excise duty, the global names​ ​ retailing in India do not have to bear any such additional burden. This shall result in a relative advantage for imported products as the Indian products keep becoming more and more expensive. This problem will be more severe in case of SAARC countries where duty free access has been granted. This would lead to domestic brands getting uncompetitive against imports from these countries especially the likes of Bangladesh, Sri Lanka, etc. and eventually result in de-growth of the Indian industry. ​5​ . With the GST likely to roll out during 2016 itself, we fail to understand the logic of making the industry go through the travails of excise regime for a short period. There are hundreds of items still outside the realm of excise, and the garment industry could well be one of those till such time GST is introduced. For the above-mentioned reasons, we implore you to roll back the excise on finished garments. The textile industry is trying to get back on its feet after suffering a major setback due to escalating prices of cotton. Levying the excise will not only result in greater torment for the industry members and will give rise to mass unemployment. It is also feared among the industry associates that levying this excise may give rise to increase in corruption. And most important it will add fuel to the already flaring inflation fire. It is our humble request on behalf of the entire textile industry of the country that you reconsider and roll back the excise duty on finished garments at the earliest. We would also like to request and audience with you so as to discuss the matter at length in person. Thanking you in anticipation. #ABOLISHEXCISEONGARMENTS With respectful regards, Yours truly, ​SAJJAN RAJ MEHTA CHAIRMAN..TAXATION COMMITTEE KARNATAKA HOSIERY AND GARMENT ASSOCIATION​