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The gain that the garment industry will realise by the effective rate of excise duty post abatement will be offset by the increase in service tax.
Mr Ashish Dikshit, President, Madura Fashion & Lifestyle, said the effective rate of excise duty post abatement has reduced by 1 per cent, but the reduction in income-tax is a welcome move as it increases disposable income in the hands of the consumer.
According to the proposal, rationalising and increasing the abatement rate for branded garments from 55 per cent to 70 per cent will result in a reduction in the effective rate of excise duty from 4.5 per cent to 3.6 per cent.
Mr Charath Narasimhan, CEO, Indian Terrain, says the effective rate of excise duty will have a negligible impact on retail prices.
“But any small reduction is welcome as this will help retailers to improve profitability to some extent.”
“The decrease in price is negligible and not worth commenting on,” said Mr Ravishankar, a private sector employee who buys at least six-to-eight branded shirts a year.
Mr J. Suresh, Managing Director and CEO of Arvind Brands, says although the 0.9 per cent drop in excise duty is minimal, the net impact will be positive as retail prices will come down.
On the rise in income-tax exemption levels and its effect on spending, he said it is “very minor”.
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