Apparel Industry’s Key Budget Demands for 2025: A Call for Policy Reforms

The Apparel Export Promotion Council (AEPC) has put forth a comprehensive set of recommendations to the government ahead of the Union Budget 2025. These demands aim to address pressing challenges faced by the Ready-Made Garment (RMG) sector and strengthen India’s position in the global apparel market.

On January 3, 2025, during a press conference held in New Delhi/Gurugram, Shri Sudhir Sekhri, Chairman of AEPC, emphasized the critical juncture the industry currently faces. “This is a watershed moment as global brands increasingly trust India to fulfill their apparel needs. With the ‘China Plus One’ strategy and the Bangladesh crisis, India is well-positioned to capitalize on these opportunities. The Union Budget presents an excellent chance for long-term policy support to propel export growth,” he stated.

Adding to this perspective, Shri Mithileshwar Thakur, Secretary General of AEPC, highlighted the need for swift policy actions. “The Indian apparel sector is on a rapid growth trajectory. By scaling production capacities, attracting investments, upskilling our workforce, and addressing labor reforms, we can outpace our global competitors. Budget 2025 must lay the groundwork for this transformation,” he explained.

Key Demands of the Apparel Industry

The AEPC has summarized its major demands, focusing on financial relief, operational efficiency, and sustainability:

1. Interest Equalization Scheme Continuation and Enhancement

AEPC has requested not only the continuation of the interest equalization scheme but also an increase in the equalization rate to 5% to mitigate the high cost of capital.

2. Concessional Tax Rate for New Manufacturing Units

The council has proposed extending the concessional tax rate of 15% under Section 115AB of the Income Tax Act to encourage the establishment of new garment units.

3. Exclusion from Section 43B (H) of the IT Act

Exporters currently face cash flow disruptions due to Section 43B(H), which mandates payment to MSMEs within 45 days for tax deductions. AEPC has urged the government to exempt exporters, as standard buyer payment terms range from 90 to 180 days.

4. Simplification of Imports Under IGCR

The process for importing trims and embellishments under the Import of Goods at Concessional Rate (IGCR) procedure needs simplification. AEPC has requested a minimum wastage allowance of 10% to streamline operations.

5. E-Commerce Export Reforms

Liberalizing e-commerce export procedures is essential. AEPC proposes increasing the cap per consignment value to ₹25 lakhs and extending the export realization period to 12 months.

6. Customs Duty Exemption for Garmenting Machinery

With domestic machinery production insufficient to meet demand, AEPC recommends reducing customs duties to zero for all garmenting machinery. This move will enhance competitiveness against countries like Bangladesh and Vietnam.

7. Green Transformation Scheme

To align with ESG compliance standards in key overseas markets like the EU and the USA, AEPC has proposed the introduction of a Green Transformation Scheme. This scheme would provide long-term soft loans for upgrading sustainability-related infrastructure, enabling factories to modernize and meet global green manufacturing standards.

Conclusion

The apparel industry is poised to play a pivotal role in India’s export growth, but sustained policy support is essential to realize its potential. The demands outlined by AEPC aim to tackle immediate challenges while paving the way for long-term competitiveness. The Union Budget 2025 is a critical opportunity for the government to reinforce its commitment to the textile sector and drive India closer to becoming a global apparel powerhouse.

N.Kumaran

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View Comments

Anil. Varma says:

January 6, 2025 at 5:05 pm

Dear CM,
Most of the suggestions are very valid but your point no 3 regarding 43B(H) of income tax act is burning issue for Tiny and Micro exporters. As per my information about 80% exporters are with less than 10 crore turn over. I being President of Delhi Exporters Association has majority of people are micro exporters. With the implication of this I. Tax act exporters are facing financial crises. They are
Suppose to pay to their suppliers between 15 to 45 days, but as per international payment norms they get payments between 3 months to 6 months.
May I request you to use your good office to get the Exporters Exemption from this I. Tax rule. Thanks in anticipation. 🙏