In anticipation of the upcoming national budget, India’s apparel export sector, represented by the Apparel Export Promotion Council (AEPC), has issued a strong call for government intervention to bolster its global standing. Key demands centre around tax incentives, streamlined import procedures, and support for modernization.
A central point of contention is Section 43B(H) of the Income Tax Act, which mandates payments to Micro, Small, and Medium Enterprises (MSMEs) within 45 days for businesses to claim tax deductions. The AEPC argues that this provision creates cash flow challenges for exporters and increases tax liabilities, urging its removal in the upcoming budget.
To further alleviate financial burdens, the council is advocating for a 5% interest equalization rate and customs duty exemptions on imported garment machinery. This is crucial, as the Indian garment industry relies heavily on imported technology to maintain quality and compete in the international market. Domestic machinery production currently falls short of meeting industry demands.
Recognizing the importance of modernizing manufacturing infrastructure, the AEPC has also requested an extension of the concessional tax rate for new manufacturing units. This incentive aims to attract investment and encourage the establishment of new garment production facilities across the country.
Streamlining import procedures for trims and embellishments under the IGCR (Import of Goods at Concessional Rate) scheme is another key priority. Simplifying these processes would reduce delays and costs associated with sourcing essential components for garment manufacturing.
Finally, the AEPC is pushing for the liberalization of e-commerce export procedures. Specifically, they are requesting an increase in the per-consignment export value cap to a minimum of Rs 25 lakh and an extension of the export realization period to 12 months. These changes would empower smaller exporters and facilitate greater participation in the burgeoning global e-commerce market.
The AEPC’s comprehensive list of demands highlights the challenges faced by the Indian apparel export sector and emphasizes the need for targeted government support to ensure its continued growth and competitiveness on the world stage. The upcoming budget announcement will be closely watched by industry stakeholders, who hope for measures that will pave the way for a more robust and dynamic export landscape.
