Budget 2012: Wear a rebate this summer

With the union finance minister marginally slashing excise duty levied on branded apparels, shoppers can hope for better deals.
The 10 per cent excise duty on branded garments announced last year was levied on 45 per cent of the maximum retail price. This year, the FM has proposed that the duty be levied on 30 per cent of MRP. This is likely to bring retail prices of branded apparel down.
Put simply, on a Rs 1,000 shirt or skirt, the manufacturer had to pay Rs 45 towards excise duty. Now, a textile company will pay Rs 36. “The announcement will see prices of private label garments coming down by seven to eight percent,” said Govind Shrikhande, MD, Shoppers Stop.
Manufacturers say the announcement coupled with easing cotton prices may reduce shopping bills.
“Last March, a cotton candy (350 kg) cost more than Rs 60,000 which is now around Rs 35,000. This combined with the reduction in excise duty will bring down the prices of readymade garments,” said Jayesh Shah, director & chief financial officer, Arvind Ltd.
However, with squeezing demand and a cash crunch, the textile industry was hoping for more. The garment manufacturers suggest the impact of excise duty reduction would be marginal and only for high-end companies.
“Though the excise duty on ready-made garments has been reduced rendering the garments more affordable, the increase in the excise duty on the acrylic fibre by 2 percent is not a good sign at all,” said Sandeep Jain, executive director of Oswal Woolen Mills Ltd.
But the powerloom, handloom and weaving sector cheered the several goodies announced in the budget.
The 5% duty on import of shuttle-less looms has been slashed to zero. Two mega handloom clusters, one in Andhra Pradesh and other in Jharkhand and five mega clusters to promote handloom, powerloom and leather sectors have been proposed. “This will promote high quality weaving,” said S P Oswal, chairman of Vardhman Group.
“The budget had no mention of reviving TUFS (technology up-gradation fund) or ways to increase domestic demand which would be hit with levy on additional service tax. The weaving and handloom sector will get impetus, but for the rest the budget has been uneventful,” said DK Nair, secretary general of the Confederation of Indian Textile Industry.
Gautam Singhania, CMD, Raymond Ltd, said, “The reduction of duty on branded garments and abatements to the textile sector, although marginal, are steps in the right direction. Overall the budget aims at resilience in the context of the current political and economic scenario.”
Budget 2012
Budget News 2012