The government is considering to roll back 10 per cent excise duty on branded garments, due to large scale protest by industry bodies in many parts of the country, including West Bengal, which goes to polls next month.
"The excise duty on readymade garments is being opposed heavily, especially in West Bengal. It might be rolled back," said a Finance Ministry official.
Although Finance Minister Pranab Mukherjee had diluted his proposal to tax readymade garments, the decision failed to satisfy the garment manufacturers who have continued the protest demanding complete roll back of the proposal.
In the Budget 2011-12, the government has levied 10 per cent excise duty on branded ready-made textiles garments.
However, while replying to debate on Finance Bill, Mukherjee had proposed to enhance the abatement from 40 per cent to 55 per cent of the retail sale price.
With this relief, a unit will continue to be eligible for SSI exemption in 2011-12 even if it had a turnover based on retail sale price of Rs 8.9 crore (Rs 89 million) in the current year, the Minister had said.
The garment traders had criticised the proposed 10 per cent excise duty on ready made garments, saying it would hurt the small business.
However, the garment traders are not satisfied with the abatement and they want the tax to be full exempted.
Nearly 3,000 members of different garment and hosiery manufacturers' associations marched in a procession in Kolkata. Hundreds of protesters were lathi charged and few of them were also arrested as they scuffled with the cops.
The imposition of excise duty on branded garments has emerged as a major election issue at Metiabruz in South 24 Parganas district of West Bengal, which houses more than 50,000 small garment manufacturing units employing lakhs of people.
West Bengal will have elections in six phases from April 18 to May 10. Mukherjee is also a Member of Parliament from the state.
Moreover, garment manufacturers in the national capital, Ludhiana and Kolkata have also gone on a strike against the proposal, said an industry association.
Clothing Manufacturers Association of India claimed that approximately 50,000 units are on strike and will affect livelihood of 25 lakh workers engaged in the garment industry.
