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GEAR Suggestion, Income tax Rebate and Don’t Cancel Domestic Orders

Published: May 9, 2020

Author: TEXTILE VALUE CHAIN

Letter Written by GEAR to Mnister of State Finance and Corporate Affairs.

Mr. Anurag Singh Thakur

Hon’ble Minister of State Finance & Corporate Affairs.

Government of India

Room No. 138, North Block

New Delhi

Subject : NO SUBSIDIES NO COMPENSATIONS REQUIRED if the Two Basic mantras Measures are sanctioned to revive the Indian Garment manufacturing industry (MSMEs) from the setback of COVID-19.

Respected Sir,

The Garment Industry basically a Cluster of MSMEs units engaged in both the Exports & Domestic Sales of Garment which is amongst the worst COVID -19 effected industry in terms of business (Exports & Domestic) Losses to the extent of over USD 4+ billion due to the worldwide impact of the Corona & the Lockdowns.

The sector urgently needs a meaningful stimulus package from the Government.

We the Garment Exporters Association of Rajasthan (GEAR), Jaipur representing the Garment Exporters Fraternity from Rajasthan suggest a “ Two Basic Mantras” which will be helpful in the long term sustainability of the Industry (MSMEs) and its employment.

Sir, The Garment Industry is a Cluster of MSMEs. Majority of the units are registered SMEs and enjoy MSME benefits as Priority Sector. During this COVID-19 pre & post impact period the Garment Industry MSMEs are & will remain the worst effected Industry and their needs are required to be addressed separately independent of other industry to make the Garment Industry MSMEs Survive and Revive.

MANTRA I :

Support from Domestic Branded Retailers & Chain stores & Buyers:

We have approached Hon’ble Union Textile Minister to initiate with the Domestic Branded Retailers, Chain Stores & Buyers to support the Garment Industry in this time of COVID impact.

We request your good offices to kindly instruct and arrange with the Textile Ministry to initiate with the Major Domestic Branded Retailers, Chain Stores and Buyer namely Westside; Pantaloon; Big Bazar; Max; Landmark Group and many others Domestic Retail Chain Stores operating in India to extend their business support to the Garment industry.

Necessary Instructions, Advisory or Official note should be issued to these Major Domestic Branded Retailers, Chain Stores and Buyer to help sustain the Garment Industry with following supports :

a. There shall be NO RETURN of the Goods that they have already received (GRN).

b. There shall not be any cancellation of orders issued to us before the outbreak with a confirmation to accept the current WIP as well.

c. The corporates shall release the maximum payment(s), in parts if need be, to their vendors for the appropriate balancing of the supply chain.

MANTRA II : INCOME TAX :–

We share a proposal cycle for the collection of Income Tax, post the Covid-19 period.

➢ Tax Structure for First 3 Years : 0% Tax (Completely Rebate).

➢ Tax to be collected 4th year :20% Tax

➢ Tax to be collected. 5th year:40% Tax

➢ Tax to be collected. 6th year : 60% Tax

➢ Tax to be collected. 7th year: 80% Tax

➢ Tax to be collected 8th year onwards 100% back to normal

The above proposal has been put forward keeping in mind to provide sustainability support and Assured Business Future to MSMEs with following considerations :

The suggested Income Tax structure is will not only boost the financial strength and confidence of the MSMEs but will STRIDE them over the needs of all Subsidies & Compensations. Give us a challenge n the Industry will fight to come out with fine colors of success with your support.

1 The unfortunate situations created during the COVID – 19 & Lock Downs duration will effect the Return on Investments and may culminate in LOSSES for the business and create Financial Crisis for present and future existence.

2 The Return on Investment would be NIL in consideration of the huge undelivered of WIP Stock which is an absolute “Perishable Stock” held since it has been procured and manufactured against specific Orders (Which now stand cancelled) . The Tailor made stock held has “no market and Value of Sale” hence it will take the manufactures minimum 3 -4 years to settled down with these stock.

3 The Employment alongwith the re-establishment of the Industry, will rise / increase 10 times in the given year of exemptions period with the Return of the desperate Labor & workmen to make good of their lost hours and re- establish themselves and their families.

4 The business and the revenue is also expected to increase by about 10-12 times post 4-5 years after the Covid period with the suggested support.

There should be no limits to business and economy boost which will drive the Foreign Exchange Reserves to increase to better level than pre COVID -19 conditions.

5 The Employment alongwith the re-establishment of the Industry, will rise / increase 10 times in the given year of exemptions period with the Return of the desperate Labor & workmen to make good of their lost hours and re- establish themselves and their families.

We are confident that the Sanctions of the above suggested Exemptions & Support will enable the MSMEs to Re-establish and Return to a Better Status. These sanctions will prove to be an Investment to the Nation – a Long Term Investment with Assured & Positive Results at the end of the period.

We are confident and repose our trust in your good offices

Expecting to receive early and timely sanctions.

Thanking You,

President

GEAR