The industry is expecting the Union Budget 2025 to focus on policies and measures that promote growth, ease of doing business and competitiveness in domestic and global markets
In a build-up to the much-awaited Union Budget 2025, industry bodies have been knocking on the Finance Ministry’s doors to swing the pendulum in their favour, hoping to have a bigger slice of the pie. The apparel industry, after facing its share of challenges in fiscal 2025, has also voiced its concerns before the all-important Union Budget that will decide how the economy’s engine will fare for the next fiscal.
Hit by supply chain disruptions, majorly arising from crisis-hit Bangladesh, the apparel industry grappled with prime issues in 2024. Factors such as rising raw material costs and inflation have put the industry players on the back foot. The industry bodies have requested the Centre to enhance the support provided to the micro, small and medium enterprises (MSMEs) and extend the production-linked incentives (PLI) scheme for garments while urging to rationalise the goods and services tax (GST) rates in certain categories.
Emphasis On Tax Reliefs
While the industry players have voiced providing the much-needed support for MSMEs, the talks around having a simplified compliance process and incentives for sustainable digital initiatives have also surfaced. The players have brought attention towards the GST rates and have also urged the Finance Minister (FM) to consider providing tax relief.
“The sector seeks enhanced support for MSMEs and startups to boost domestic production and exports. As consumer sentiment remains pivotal, tax reliefs to increase disposable income would drive demand,” highlighted Deepak Bansal, Whole time Director, Cantabil Retail India.
The industry players have also urged the FM to reduce GST on man-made fibres (MMF) to align with natural fibres like cotton to promote MMF adoption and drive competitiveness. However, the experts have called for retaining the current tax slabs for certain categories.
Jaiwant Singh Dhingra, Director of Marketing and Business Development at Numero Uno, stated, “The Union Budget 2025 is a vital opportunity for growth and innovation in the textile and retail sectors. Lowering GST on clothing could boost affordability and demand, while incentives for sustainable domestic manufacturing would enhance exports and strengthen India’s position globally. Investments in infrastructure, simplified ecommerce laws, and workforce skill development are essential for meeting evolving consumer demands. We hope the budget supports India’s vision of becoming a hub for premium, eco-friendly fashion.”
Satyen Momaya, Chief Executive Officer (CEO), Celio India stated, “We urge the government to boost consumer demand by reducing individual income tax and interest rates. The apparel and lifestyle retail segment, impacted by subdued demand over the last 12-18 months and inflation, would greatly benefit from retaining the current GST slabs, especially for products priced at Rs 1,000 and above.”
Extension Of PLI Scheme For Garments
The experts highlighted the need for extending the PLI scheme to encompass all categories of garments. The experts stated that in the existing PLI for textiles, several important garment categories were excluded which made it difficult for the industry to invest as generally garment factories can produce multiple types of products with the same technology and also the buyers look for full packages from suppliers (including all different types of products from same supplier).
“While the existing PLI scheme for textiles has made some progress, its focus has been predominantly on synthetic products, an area where India’s garment sector capabilities are limited. To maximise the sector’s potential, it is critical to extend the PLI scheme to encompass all categories of garments,” stated Santosh Kataria, President, Clothing Manufacturers Association of India (CMAI).
Enhancing Support To MSMEs
With the MSME sector being a major contributor to the garment sector, the experts have urged the Centre to double down on its efforts to boost the sector’s productivity, ease their financial constraints, foster operational stability as well as ensure the continued viability of the sector.
As per the experts, MSMEs require special financial packages or subsidies, simplified compliance procedures and reduced interest rates on loans to enhance productivity and scale operations.
“A reduction in GST rates on job work activities like stitching and embroidery would alleviate cost pressures, especially for MSMEs, which form the backbone of the industry,” highlighted Harsh Somaiya, Co-Founder, The Bear House.
Highlighting that MSME vendors suffer due to being categorised as operational creditors, the industry bodies noted that if MSMEs in the garment sector are categorised as secured creditors, it will provide them financial security and make it easier for them to recover their payment.
“With stringent rules coming up for sustainable manufacturing and better practices around the world, it is time we re-evaluate the regulations of textile manufacturing in India. Value the native fibres growing in the country, make it easier for farmers to grow them,” highlighted Aishwarya Lahariya, Co-founder, Jiwya.
Promotion Of Exports
Stating that a sector-specific PLI scheme is essential to boost manufacturing and exports, the industry players added that a special package to promote Indian brands in global markets would enable them to compete effectively with established international players, fostering a stronger presence on the world stage. CMAI has recommended a thorough review of the country’s free trade agreement (FTA) with Bangladesh to ensure a level playing field for our domestic manufacturers and has urged the Centre to permit duty-free imports only for garments made out of Indian fabrics.
“Whilst the Government has so far involved itself in formulating policies for the export sector – which is good – but the time has come for the domestic sector to get its due share of attention. India’s domestic sector is over USD 80 billion – and even a 10 per cent increase will be equal to 50 per cent of our apparel exports,” said Rahul Mehta, Chief Mentor, CMAI.
With the industry expecting the Union Budget 2025 to focus on policies and measures that promote growth, ease of doing business and competitiveness in domestic and global markets, it will be interesting to see which path the Finance Minister chooses to ensure that the needs of the industry are met, while keeping the balance intact.
