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Branded garment makers, retailers rule out price cuts
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New Delhi, 20 March, 2012
Faded apparel manufacturers feel the overall relief of 0.9% is too meager to bring down prices immediately .They say that the announced increase in service tax will also impact their business and they are disappointed that their request for an the excise roll back was not considered.
The government’s move to provide partial relief in excise duty on branded garments’ in the Budget might help improve profitability, but there will not be any immediate price cuts, retailers and manufacturers have said.
“The latest change in the Budget is a small one though, but it will provide a certain amount relief in terms of stability of product prices,” said Atul Chand, chief executive retailing, ITC Lifestyle. There might also be some price reduction over a period of time but not immediately, he added.
Finance minister Pranab Mukherjee has raised abatement on branded garments from 55 per cent to 70 per cent thereby bringing down the effective excise to 3.6 per cent from 4.5 per cent earlier. He has announced increasing the overall excise duty rate to 12 per cent from 10 per cent earlier.
Manufacturers also expressed similar views that it is too little for the garments industry that has been under pressure due to several reasons, including the excise duty, high cotton prices and overall slowdown.
“Such a small difference is unlikely to translate into reduction of prices, but it will help bottomlines of manufacturers,” said Rahul Mehta, president, Clothing Manufacturers Association of India (CMAI).
Source: The Financial Chronicle
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