The textile ministry is hopeful that the finance ministry would remove the 10% excise duty on garments in the next Budget, a senior official said.
Textile secretary Rita Menon told FE: ?I am soon going to write a letter to the finance ministry. We have analysed the reduction in the domestic retail demand for garments on account of the duty imposed in the last Budget. I am hopeful it (10% excise duty) will not remain after the next Budget.?
According to the Clothing Manufacturers Association of India (CMAI) estimate, in the first quarter of the current fiscal, the organised retailers have taken a hit of around R1,700 crore because of the duty. They have also witnessed an early end of seasonal sales. This could cost them another R2,500 crore.
CMAI president Rahul Mehta said, ?We have submitted a representation to the textile ministry capturing the fall and the loss. We fear that the organised retail garment sector would continue to underperform. We have been assured by the government that this representation will be forwarded to the finance ministry soon.?
Apparel sales have also slumped about 20% since March, forcing many brands to start end-of-season discount sales two weeks earlier than usual. Companies blamed the new excise duty and the high cotton prices earlier in the season for the fall in garment demand.
?The present trend indicates that the industry will hardly be able to sustain a growth of 10-15% as margins are under tremendous pressure,? Mehta said.
Meanwhile, Menon added she met major retailers like Shoppers Stop and Pantaloons recently. ?They (the retailers) have also told me that if the duty is not removed, the retailers will have to source garments from other countries and the domestic manufacturers will lose out,? she said.