Clothing and accessories are
classified under HS code 61 and 62. All the products listed under these
codes are freely importable. Further more the manufacturers of these
products are exempt from obtaining a license to manufacture though they
are required to file an Industrial Entrepreneur Memoranda (IEM) in Part
'A' with the Secretariat of Industrial Assistance (SIA), and obtain an
acknowledgement and part B after the commencement of commercial
production. Certain items of clothing are reserved for small scale
industries.
Most of the articles falling under HS 61-62 carry an import duty of
56.83 per cent which includes 30 per cent basic duty, 16 per cent
additional duty and 4 per cent special additional duty. India has
reduced peak rate of customs duty to 20%, in view of the WTO Agreement.
In the foreign trade policy, certain amendments and inclusions have
been done pertaining to specific sectors of textiles and garments
specially the handlooms.
Handlooms
- Specific funds would be earmarked under MAI/ MDA Scheme for
promoting handloom exports.
- Duty free import entitlement of specified trimmings and
embellishments shall be 5% of FOB value of exports during the
previous financial year.
- Duty free import entitlement of hand knotted carpet samples shall
be 1% of FOB value of exports during the previous financial year.
- Duty free import of old pieces of hand knotted carpets on
consignment basis for re-export after repair shall be permitted.
- New towns of export excellence with a threshold limit of Rs 250
crore shall be notified.
The textile and apparel industry is an important one to India,
contributing 1.6% of industrial production and 30 % of total exports.
- Import duties on capital equipment are low (the majority of the
capital equipment used by the apparel industry, like sewing
machines, can be imported at 5% basic customs duty).
- Fabrics can be imported duty-free if made up into garments and
re-exported
- Import duties on fabrics and other raw materials are duty free
for export production.
- The apparel industry can import duty free specified trimmings and
embellishments like Fasteners, Rivets, Garment Stay, Laces, Badges,
Sewing Thread, Sequin, Tape & others for export production.
