FROM THE EDITOR-IN-CHIEF ’ s DESK …
The conflict of interest between what the nation needs and what industry wants , has always been a great balancing act for Governments when announcing budget allocations and proposals . The recent budget announcement for the Financial Year 2017-18 has been no different . While in certain areas , the national interest in terms of the masses has been safeguarded , in other cases efforts have been made to support growth of the industry .
While the industry is happy with the increased allocation for improving infrastructure , concerns regarding increased taxation burden on the industry are afloat . Gas prices are already increasing substantially and with imposition of 15 % VAT on gas and power price , the cost of fuel and power will reach a new peak . For the garment industry that operates on very less profit margin , this rise may be devastating and some fear it may even cause closure of many businesses .
It is being widely said that no significant amount has been allotted for the encouragement of industry ; instead the Government has presented a budget that proposes apparel exporters to pay 1 % of their export earnings as source tax which was previously 0.7 %. This has really been a blow to the industry .
Industry bodies are demanding that Government should reduce the source tax to zero per cent as the garment sector has been passing through a bad time . The industry is also not happy with the reduction of the corporate tax of garment factories to 15 % from 20 % at present . It is not enough to cover up the extra cost of operations that the companies are facing today .
BGMEA has demanded a reduction in the corporate tax at 10 % and cash incentives at 5 % for at least the next two years so that the sector can face the challenges of falling export , stemming from a volatile global economy .
There has also been a suggestion that companies running ‘ green ’ factories should be ‘ rewarded ’ and the difference in the corporate tax for the garment factories and ‘ green ’ garment factories should at least be of 5 % as this would encourage companies to set up more ‘ green ’ units , which will save more energy and water . In the current budget , the Finance Minister has proposed 14 % corporate tax for the ‘ green ’ units , just 1 % below that of other industries .
It is being argued that while cost of production increased by 18 % in last two years , exports have declined by 6.80 % in the US market and by 5.91 % in the UK market in July-April period of the current financial year . Also , the industry that has witnessed over 13 % growth over the last 10 years has seen the growth decline to less than 3 % in recent months which is a cause of great worry .
The next two years are extremely critical in deciding where the industry will go ; hence strong support from the Government at this juncture is very important . We can all hope that the Government is listening !
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EDITOR-IN-CHIEF EDITOR DEPUTY EDITOR COPY EDITOR ASST . COPY EDITOR CREATIVE TEAM
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Deepak Mohindra Ila Saxena Deepankar Shyam Veereshwar Sobti Sahil Sehgal
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