Fortunately both proposals were withdrawn, not because of any sudden realisation that advertising served a useful purpose, but because of the pressure of the media which did not want to lose advertising revenues. Morarji Desai in one of his stints as finance minister introduced a tax on branded cigars. The present finance minister has followed his distinguished predecessors by imposing a 16 per cent excise duty on branded garments, and later amended it to include unbranded ones as well. It signifies the hostility to the idea that large units which contract manufacture to small ones, receive much higher prices merely because they add a brand name. This antipathy to brands and to the advertising that helps establish them, is part of a mind set that must go in a reforming economy.
Brands build companies and add to both customer and shareholder values.
Contract manufacture to small units is a worldwide phenomenon. It guarantees business and payments to the small units. Many times they also get technical help to improve and maintain quality. It is the foundation on which many small units have built themselves to become large. The present finance minister s first proposal of a 16 per cent excise duty on branded garments would have made Indian manufacturers highly uncompetitive to the new branded imports as markets are thrown open.