The man-made fiber (MMF) textile industry is very disappointed with the different GST rates announced for the textile industry by the GST council in its meeting held on June 3, 2017, stated V Anil Kumar, Executive Director, Synthetic and Rayon Textiles Export Promotion Council (SRTEPC) in a release issued recently.
Chairman SRTEPC, Narain Aggarwal said, “We share the deep disappointment expressed by various quarters of the MMF textile sector. Lack of uniformity in the GST rates for the textile sector will adversely affect growth sentiments. This may drag exports and growth negatively affecting employment generation, which is a much needed priority of the government at this juncture.”
The chairman expressed his apprehension and stated, “The MMF textile sector has been pleading for a uniform tax rate of 5% across the value chain to rejuvenate the entire textile sector verticals. High GST rates of 18% announced for MMF fiber and yarn, dying and printing units and 12% imposed on embroidery items can lead to increase in input costs and will affect the entire textile value chain adversely.”
“Keeping the rates of key inputs at a higher level will further affect the competitiveness of the MMF sector resulting in low export growth, when the industry and government are eager to have an enhanced growth,” he added.
The chairman urged the government to reconsider the higher GST rates announced for MMF products and requested the government to bring it to an uniform rate with other verticals or lower it to 12% from the current 18%. “This is imperative as India is already reeling under huge competitive disadvantage in the international textile market when it comes to MMF based textile products. We have to bear in mind that our competitors like China, Vietnam and Bangladesh are striving ahead in global exports of MMF textiles,” he added.
The chairman also highlighted another area of increasing concern, which needs to be addressed urgently. “This concerns the non-allowance of refund of accumulated credit for the textile sector. This will affect the entire processing, embroidery and job works segment. In fact, the job works segment is the weakest link in the entire value chain of the textile sector,” he said.
The chairman pointed out that this might go against the popular norm of encouraging value addition especially needed for the MMF sector. Citing an instance, he said, “The GST on raw materials for the MMF sector is 18% and that of fiber is only 5%. At the point of sales, one has to forego the accumulated credit, which is a huge loss. This will indirectly add to the cost of the product being sold. This will result in MMF fabrics turning uncompetitive and also affect domestic fabric production. The domestic front is already reeling under huge imports from competitors like China.”
Summing up, the chairman urged the government to bring about lower and uniform GST rates for the entire textile sector to rejuvenate the labour intensive industry and create new employment and business opportunities. “This will result in higher revenues for the government in the medium term and is preferable to availing maximization of revenue in the short term,” he pointed out. “The high GST rate will also dampen the growth momentum and investment spirit generated by the ministry of textiles after it announced a slew of stimulus packages for the industry,” he concluded.
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