AEPC Urges Tax Reforms In Budget 2025 To Boost Garment Exports
The Apparel Export Promotion Council (AEPC) has urged the government to introduce critical tax incentives and policy reforms in the upcoming Union Budget 2025 to enhance the competitiveness of India’s garment export sector. In its statement on Saturday, the council highlighted the need for measures to streamline compliance, support manufacturing and reduce operational challenges faced by exporters.
One of the council’s key recommendations is the revision of Section 43B (H) of the Income Tax Act, which currently mandates payments to MSMEs within 45 days to qualify for tax deductions. According to AEPC, this provision disrupts exporters’ cash flow and creates additional tax liabilities, hindering smooth operations.
The AEPC also called for an interest equalisation rate of 5% to provide exporters with affordable access to credit, alongside an extension of the concessional tax rate for new manufacturing units. These measures, it argued, would encourage investment in garment production facilities and drive long-term growth in the sector.
To promote e-commerce exports, the council proposed raising the cap on export value per consignment from the current Rs 5 lakh to Rs 25 lakh and extending the export realization period to 12 months. It also advocated for the liberalization of procedures to simplify and accelerate the growing digital trade segment.
In addressing import challenges, AEPC requested the simplification of the Import of Goods at Concessional Rate (IGCR) scheme, particularly for trims and embellishments essential to the garment industry. Additionally, the council emphasized the urgent need to reduce import duties on garment machinery to zero, noting that high tariffs significantly impair India’s global competitiveness compared to countries like Vietnam and Bangladesh.
Chairman of AEPC, Sudhir Sekhri, highlighted that the Union Budget presents a pivotal opportunity to address the sector’s long-term policy needs. “The garment export industry is heavily reliant on imported machinery to maintain global quality standards. Elevated import duties and procedural complexities have made Indian exports less competitive on the global stage,” Sekhri stated.
He further highlighted the importance of policy support in driving the industry’s growth, particularly through measures that reduce operational costs, improve cash flow and enhance market access. “The Union Budget is a great opportunity to implement transformative measures that can propel the garment sector toward sustainable growth and global leadership,” Sekhri added.
India’s garment export sector, a significant contributor to the nation’s foreign exchange earnings, is seeking proactive government intervention to address challenges and position itself strongly against international competition.
