Industry body Assocham today urged the government to reduce excise duty on branded garments to 1% from 10% at present.
"The Rs 1.5 lakh crore industry, providing direct employment to 60 lakh people, has witnessed lower growth due to hike in excise duty, rising material and labour costs and increase in interest rates," The Associated Chamber of Commerce and Industry of India said.
There has been a strong consumer resistance against increase in prices, resulting in a significant drop in demand, forcing retailers to resort to extended discounting and creating further stress on margins that are already under severe pressure, it said.
In the Budget 2011-12, the government has levied 10% excise duty on branded apparel.
"The domestic branded apparel industry has suffered badly due to 10% excise duty. Reducing the duty to 1% will provide relief to the industry," it added.
The Union Budget for 2012-13 is scheduled on March 16.