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Expectations For The Budget 2024: Garment Exporters Want Tax Breaks To Promote Manufacturing

<p><strong>Expectations for the Budget of 2024:</strong> To support local manufacturing and improve India’s exports, the Apparel Export Promotion Council, or AEPC, has called for tax benefits, such as greater interest subsidies and consistency in the Goods and Services Tax (GST).</p>
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<p>The AEPC has advocated for tax breaks to be given to clothing producers that follow international quality standards and comply with ESG (environmental, social, and corporate governance) policies.</p>
<p>The funding help for the branding and marketing of items created in India was also requested by the council.</p>
<p>According to the council, interest equalization rates on pre- and post-shipment export loans for manufacturers who are not Micro, Small, and Medium Enterprises (MSME) exporters have been lowered from 3 to 2%.</p>
<p>The exporting community has been severely hampered by the high cost of capital. In order to boost the garment industry’s competitiveness in the global market and provide them with access to operating capital, AEPC has asked the government to raise the rates under the plan to 5% for all apparel exporters.</p>
<p><strong>Standard GST</strong></p>
<p>It said that a consistent tax of five percent should be applied to the Goods and Services tax (GST) along the whole value chain of Man-Made Fibre (fibre, yarn, and fabric).</p>
<p>The MMF GST rate on fiber is now 18%, yarn is 12%, and fabric is 5%. As a consequence, the council said, MSME units are experiencing unutilized input credit and ensuing financial problems.</p>
<p>Additionally, it recommended that the government include embellishments and trims under the Import of Goods at Concessional Rates (IGCR) tariff regulations.</p>
<p>To guarantee the required functionality and aesthetics of clothes in the worldwide market, the activities engaged in the garment export trade generally need a variety of high-quality trimmings and decorations (belts, buttons, labels, stickers, linings, inter-linings, etc.).</p>
<p>Foreign customers rely on preserving consistency and quality and avoiding the use of counterfeits in order to preserve their brand image.</p>
<p>It said that any departure in the quality and specification leads to the shipment’s rejection.</p>
<p>The council emphasized that Indian clothing exporters are limited to using only trimmings and decorations that have been pre-approved by the client and are often needed to be procured from abroad suppliers selected by the garment purchasers.</p>
<p>It said that as of right moment, certain embellishments and trimmings are not free from duties.</p>
<p>“AEPC has requested that a list of items that are currently prohibited be included in order to qualify for duty exemption, including draw cord, elastic band/tape, metal tab/stopper/clip, velcro tape, leather badge, and D-ring,” the AEPC said in a statement.</p>
<p>Additionally, it has pushed for the IGCR regulations governing the import of trimmings and accessories to permit a minimum of 10% waste by means of a suitable notice.</p>
<p>This would assist exporters of clothing in timely submission of their usage data and execution of the bond at the customs release.</p>
<p>2024 Budget Date: On February 1st, the budget is expected to be revealed.</p>