The Budget 2011 has left the garment export industry under severe shock with the announcement that the optional excise duty regime has been converted into mandatory route at a unified rate of 10% for branded garments without Cenvat credit facility. This move would increase the transaction and administrative costs. According to Premal Udani, chairman of Apparel Export Promotion Council, the excise duty on branded apparel was voluntary. The branded apparel manufacturer will have to mandatorily pay the excise duty of 10%.
A Sakthivel, president of the Tirupur Exporters Association emphasis that the mandatory duty should be applicable only to branded garments for domestic sales and exporting units should not be compelled to register with central excise department. Thulasidharan, chairman of the Southern India Mills Association feels the government could have implemented this exercise in stages to safeguard the interests of the industry.