A ten percent excise duty imposed on readymade garments in the general budget has forced innerwear manufacturers to reconsider using celebrities as brand ambassadors
Who better from Bollywood to promote a men's innerwear brand than Salman Khan? The man who is prepared to give anyone the shirt off his back, and not just metaphorically, has been the brand ambassador of Dixcy Scott for over a year. But soon Salman and a few other celebrities like him maybe forced to button up.
Body blow: Salman endorses Dixcy Scott.
That's because readymade cloth manufacturers claim that the industry is leading towards a dead end and after the levy of 10 per cent excise duty on garments in this budget, they may soon have to shut shop. Undergarment producers have expressed that they are finding it hard to sustain the rising production costs along with the huge expenses on brand ambassadors and advertising.
Cash crunch? Bollywood star Hrithik Roshan is the brand ambassador
for inner garment manufacturer Rupa.
Industry insiders don't sound too optimistic. "The entire industry is badly hit as the cost of cotton and raw material required for the production has gone up by 130 per cent in the past one year. So far we have not increased the price but after this 10 per cent excise, we won't be able to run the companies.
We cannot cut down on number of labourers or their salary as both are not feasible. It is true that big brands need big celebrities. But if things continue in the same vein, the undergarment industry may not be able to afford the high-priced stars," said Prem Prakash Sikka, Managing Director of Dixcy Textile Pvt Limited. Sikka is heading the protest against the burden on the industry in Tirupur.
Similarly, other market leaders are holding demonstrations at various parts of the country to make themselves heard. "The condition is so bad that our stocks are piling up as previous goods remain unsold. This is also going to leave a direct impact on customers as costs will increase by about 75 per cent leaving them with no options. Advertising is very important for any company and brand, but yes we may see sharp decline in brand endorsement.
All celebrities have contracts with companies but we would not be able to pay hefty amounts to known faces," said KB Agarwal, Managing Director, Rupa & Company Limited. He is heading a protest in Eastern India, being President of Federation of Hosiery Manufacturers of India.
In view of the recent development regarding the levy of 10 per cent excise duty on garments traders have called for a bandh on 4th of March 2011. The associations and their members along with employees and workers will stage a protest against the newly passed taxation law. It is estimated that around one lakh people will gather at Jantar Mantar.
The agitation is also being replicated in other major cities like Kolkata, Ludhiana and Mumbai on the same day with the aim of raising a collective voice against the 'insensitive' measures taken by the finance ministry.
Industry experts feel that apart from celebrities, models and purchasers, lakhs of workers engaged in this trade will feel the heat.
"In Delhi more than five lakh people are employed in this industry. It's a mass employment sector and overall impact will be seen on these labourers so more than one lakh people are expected who will join hands in this protest. Even the leading retail outlets have agreed to stay close on March 7 as protest. All the trading at leading Delhi market will also remain closed," said Rakesh Grover, MD, Groversons Group & President, Intimate Apparel Association of India.
Workers are employed in the readymade garments industry in Delhi
Vest case scenario
Leading models are also concerned about the rising cost of production as it will lead to a cut in their fee. Shamaun Ahmed, a known face in Kolkata's modelling circuit who endorsed Kothari Hosiery Factory said: "After rise in prices of onion and oil, now the government doesn't even want us to wear undergarments! Brilliant! What else can we ask for? If prices are going to double, I am sure a lot of people would stop using underwear simply because they won't be able to afford them anymore. It's definitely going to affect my endorsements, because companies will not earn much, so how will they pay?"