The textile industry, ahead of the Union Budget 2025-2026 has seen fit to make various demands from the Government to improve the conditions of the textile and apparel industry and make it more competitive on the global stage as well as take advantage of the growth trajectory and leverage the evolving supply chain reorientation.
The Apparel Export Promotion Council (AEPC) has made a series of demands for the same, aiming to aid the Indian textile industry.
In order to counteract the high cost of capital, AEPC has asked for both the continuation of the interest equalisation program and an increase in the interest equalisation rate to 5 per cent.
To promote the establishment of new clothing units, AEPC has suggested extending the section 115AB concessional tax rate for new manufacturing facilities. In accordance with Section 115AB of the Income Tax Act, the Council has suggested a 15 per cent concessional duty rate.
The RMG industry has also called for the IT Act’s Sec43B (H), which deals with paying MSME enterprises within a 45-day window in order to claim a tax deduction, to be removed from the next budget. Exporters’ cash flow has been hampered and their tax obligations have grown as a result. Exporters must offer a lengthy credit period for payment because many customers follow the typical 90–180 day payment window. As a result, exporters need to be exempt from income tax 43B(h).
It is recommended that the IGCR (Import of Goods at Concessional Rate) guideline for the import of trimmings and embellishments be made simpler and that a minimum waste of 10 per cent be permitted.
The council has asked for the export procedures for e-commerce to be liberalised. These current regulations should be made simpler, the export realisation time should be extended to 12 months, and the maximum export value per consignment under e-commerce should be raised to at least 25 lakhs (Approx US $ 29,000).
Due to limited domestic production to fulfil demand, India’s garment export industry mostly depends on imported garmenting machinery to maintain quality and worldwide competitiveness. Indian clothing exports are less competitive when compared to nations like Bangladesh and Vietnam due to high import tariffs. To increase the efficiency of the industry, AEPC suggests not only maintaining current exemptions but also lowering the customs charge to zero on any remaining clothing machinery.
India must give the improvement of sustainability-related infrastructure top priority given the increasing focus on ESG compliance in important international markets, especially in the USA and the EU. The Indian government ought to implement a refinance program, like the Green Transformation Scheme, to encourage and support environmentally friendly and sustainable manufacturing. Under this plan, clothing manufacturers would be able to obtain long-term soft loans to acquire the equipment they need to update their green and sustainable manufacturing facilities.
“This is a watershed moment, when India is aspiring to capture higher share in global imports of apparel owing to the enhanced trust that global brands are placing on India,” said Sudhir Sekhri, Chairman of the AEPC, talking about the budget demand. “Given that reputable international buyers, retailers, and chain shops are searching for alternatives as a result of the Bangladesh issue and China plus one factor, it is the ideal moment for the nation to take advantage of it in terms of export growth.”
