Govt urged to lift VAT from readymade garments

JAIPUR: Rajasthan Readymade Garment Manufacturers' Association submitted a representation to the state government demanding lifting VAT on readymade garments manufactured in the state.
"The government must lift 5% VAT from the readymade garments manufactured in the state for the growth of the business. We are facing a tough time following heavy inflow of readymade garments from China, Taiwan, Thailand and Indonesia in the state where the industry in readymade textiles is on a rather advanced stage," said Rajendra Sethi, president of the association.
According to Richa Rathore, "Today, the trend of buying material and stitching clothes is absolutely outdated even with the poor man.Besides, the influx of readymade garments from China that are competitively priced alone is about 30% of the total apparel market. In that case even 5% VAT proves to be expensive for the ordinary man."
Last budget the government had increased VAT on readymade garments from 4 to 14% wherein rate of VAT in Rajasthan for readymade garments was the highest in the entire country that resulted in escalated cost of local products within the state as compared to same product sold in other states. Later, however, with the traders protesting, the government reduced it to 5% which was still higher than the other states that have 4% VAT except Delhi, UP and Punjab that have 5% VAT on readymade garments.
Besides, "The readymade industry in Rajasthan that comes under the ambit of cottage and small industry is the second largest employment generating industry after agriculture. Lakhs of rural women are employed in several jobs associated with the industry. The tie and dye industry in Rajasthan is very popular world over," said Sethi.
High production cost is also leading to many of the manufacturing units pulling down their shutters. "Manufacturers are now migrating to other states including Haryana, Gujarat, Madhya Pradesh where the state governments have provided several incentives for the readymade garment industry," Sethi said.