In what would come as major relief to garment manufacturers, Centre may withdraw the mandatory 10 per cent excise duty on branded ready-made garments. The duty was imposed in the budget for this financial year on branded apparel sector that is pegged at Rs 40,000 crore a year.

I am in the process of taking up the matter with finance ministry. I will write to finance minister by end of this month requesting him to consider the sectors demand for withdrawing 10 per cent mandatory excise duty on ready-made garments as it has led to reduction in retail domestic demand since April, 2011 textiles secretary Rita Menon said.

Menon is confident that this mandatory excise duty would be withdrawn in next years budget as it has led to a discernable slowdown in the apparel sector.

She was speaking on the sidelines of 47th India International Garments Fair held by Apparel Export Promotion Council.

Till now, ready-made garments and made-up textiles were under an optional excise duty regime wherein manufacturer was required to pay excise duty only if he wished to avail Cenvat credit. Over 90 per cent of apparel manufacturers are small and medium enterprises that were not availing cenvat and therefore had never paid excise duty at the factory-level.

As far as garment exports are concerned, Menon said that twelfth five year plan would see continuation of Textile Upgradation Fund Scheme as well as scheme for skills upgradtion in the highly labour intensive sector.