AEPC Chairman Urges Policy Stability and Budgetary Support for Garment Industry Growth

New Delhi, July 15th, 2024: In a statement today, the Apparel Export Promotion Council (AEPC), the leading body for promoting garment exports in India, outlined its key policy and budgetary demands for the upcoming Union Budget 2024.

Shri Sudhir Sekhri, Chairman of AEPC, emphasized India’s potential to become a significant global player in the textiles and apparel sector. “With a complete value chain and a commitment to compliance-driven quality products, India is poised to unleash its prowess,” he stated. “A long-term policy framework for garment industry schemes will provide much-needed stability and proactively support garment exports.”

A key demand is a five-year extension of the Interest Equalization Scheme (IES) with a fixed rate of 5% for all apparel exporters. This scheme helps exporters bridge the gap between pre-shipment and post-shipment finance costs. Shri Sekhri highlighted the importance of this measure in enhancing the industry’s competitiveness in the international market.

Shri Mithileshwar Thakur, Secretary General of AEPC, further underscored the industry’s potential for job creation and women’s empowerment. “This labor-intensive sector needs the right push and government support,” he said. “It holds the key to generating massive employment opportunities and empowering women, which in turn can drive positive socio-economic change across the country.”

AEPC’s Budget Wishlist for the Garment Industry

• Interest Equalization Scheme (IES): Extend the scheme for five years with a fixed rate of 5% for all apparel exporters.
• Import Duty Relief: Include trimmings and embellishments under the Import of Goods at Concessional Rates of Duty Rules (IGCR Rules).
• Extended Utilization Timeframe: Extend the timeframe for utilizing trimmings and embellishments imported under IGCR to one year.
• Duty-Free Courier Imports: Allow duty-free benefits under IGCR for courier mode shipments of trimmings and embellishments. Currently, duty-free benefits are only available for cargo shipments.
• Reduced Customs Duty on Machinery: Reduce customs duty on high-end textile machinery to 0% for three years to facilitate technology upgradation. This can be followed by a strategic increase in tariffs to encourage domestic textile machinery manufacturing.
• Uniform GST Structure: Implement a uniform 5% GST across the entire value chain for all fibers, both natural and man-made. The current structure disadvantages manufacturers due to an inverted tax structure, where input taxes are higher than finished product taxes.
• Green Initiatives: Provide subsidized loans for readymade garment manufacturers who utilize organic, locally sourced materials and invest in green technologies.
• Supply Chain Traceability: Offer incentives for factories implementing traceability initiatives in their raw material supply chains.
• Relocation Incentives: Offer relocation compensation to companies moving their operations from industrial clusters and cities to hinterlands.
• Direct Tax Benefits for ESG Compliance: Provide direct tax concessions to apparel manufacturers who adopt Environmental, Social, and Governance (ESG) practices and adhere to international quality norms.
• Branding and Marketing Support: Allocate budgetary resources for branding and marketing initiatives to promote “Made in India” apparel products globally.

By implementing these measures, the AEPC believes the government can significantly empower the garment industry, creating jobs, fostering women’s empowerment, and propelling India towards becoming a leading global player in the textiles and apparel sector.