The AEPC also called for an interest equalisation rate of 5 per cent to be announced in the upcoming budget, which will be presented by Finance Minister Nirmala Sitharaman on February 1.
The Apparel Export Promotion Council (AEPC) urged the government to introduce tax incentives, including the removal of a provision that requires payments to MSMEs within 45 days in order to claim deductions and an exemption on customs duty for garment machinery imports. The AEPC also called for an interest equalisation rate of 5 per cent to be announced in the upcoming budget, which will be presented by Finance Minister Nirmala Sitharaman on February 1.
Among other requests, the AEPC proposed an extension of the concessional tax rate for new manufacturing units to promote the establishment of new garment factories, simplification of the procedure for importing trims and embellishments under Import of Goods at Concessional Rate (IGCR), and the liberalisation of e-commerce export procedures.
The RMG (Ready-Made Garments) industry also sought the removal of Section 43B (H) of the Income Tax Act, which pertains to payments to MSMEs within a maximum of 45 days for claiming tax deductions. According to the AEPC, this provision has led to increased tax liabilities and disrupted the cash flow of exporters.
In addition, the AEPC recommended that the cap on the per consignment export value under e-commerce be raised to a minimum of Rs 2.5 million, and the export realisation period be extended to 12 months.
India’s garment export sector heavily depends on imported machinery to maintain quality and global competitiveness, as domestic production is unable to meet demand. The AEPC highlighted that high import duties make Indian garment exports less competitive compared to countries like Bangladesh and Vietnam. To address this, they suggested continuing existing exemptions and reducing customs duties on the remaining garment machinery to zero to improve the sector’s efficiency.
Sudhir Sekhri, Chairman, AEPC, emphasised that the Union Budget provides a significant opportunity to consider long-term policy support for the sector.
Mithileshwar Thakur, Secretary General, AEPC, stated that there is an urgent need for quick adoption of the right strategies to take advantage of the evolving supply chain reorientation. He noted that the Indian apparel sector is on a strong growth trajectory and has the potential to surpass global competitors by enhancing production capacity, channelising investments, upskilling the workforce, and implementing labour reforms.