Apparel Exporters Advocate for 5% Interest Equalization Scheme Rate for Five Years
15 July, New Delhi/Gurugram: The Apparel Export Promotion Council (AEPC), a leading body promoting garment exports in India, has outlined key demands for the upcoming Union Budget 2024 on behalf of the apparel industry.
Shri Sudhir Sekhri, Chairman of AEPC, stated, “With our complete value chain and commitment to compliance-driven quality products, India is poised to become a significant global player in the textiles and apparel sector. A long-term policy for industry-related schemes will provide stability and proactively support garment exports from the country.” He emphasized that one of the primary demands is a 5% interest rate for all exporters under the Interest Equalization Scheme for a minimum of five years.
Shri Mithileshwar Thakur, Secretary General of AEPC, added, “This labor-intensive sector requires substantial government support to unlock massive employment opportunities for youth and empower women, thereby transforming the socio-economic landscape of the country.”
Key Recommendations from AEPC for the Union Budget:
- Interest Equalization Scheme: Increase the rates to 5% for all apparel exporters for five years to enhance competitiveness in the international market.
- IGCR Rules: Extend coverage of all trimmings and embellishments under Import of Goods at Concessional Rates of Duty Rules (IGCR Rules).
- Utilization Timeframe: Extend the timeframe for utilizing trimmings and embellishments imported under IGCR Rules to one year.
- Courier Shipments: Allow duty-free benefits for imports via courier mode under IGCR, currently limited to cargo shipments.
- Textile Machinery: Reduce customs duty on high-end textile machinery to zero percent for three years to facilitate technology upgrades, followed by higher tariffs to encourage foreign investment in domestic textile machinery manufacturing.
- Uniform GST: Implement a uniform GST of 5% across the entire value chain. Current rates for inputs (18% for fiber, 12% for yarn) are higher than for final products (5% for fabric and apparel under Rs. 1000, 12% for apparel above Rs. 1000), leading to input tax credit accumulation and blocking working capital.
- Subsidized Loans: Provide subsidized loans for readymade garment manufacturers using organic, locally sourced inputs and investing in green technologies.
- Traceability Incentives: Offer incentives for factories implementing traceability initiatives in the raw material supply chain.
- Relocation Compensation: Compensate companies relocating from industrial complexes and cities to hinterlands.
- Tax Concessions: Provide direct tax concessions for apparel manufacturers adopting ESG and other international quality norms and compliances.
- Branding and Marketing Support: Allocate budgetary support for branding and marketing ‘Made in India’ products.