GST: SIMA Urges Refund Of Accumulated Input Tax Credit To Avoid Fabric Imports

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GST: SIMA Urges Refund Of Accumulated Input Tax Credit To Avoid Fabric Imports

The Southern India Mills' Association (SIMA) has appealed to the Centre to refund the accumulated input tax credit under GST at the fabric stage, by anywhere between three per cent and five per cent to avoid any further impact on capacity utilisation.

According to the SIMA appeal, apart from avoiding cost escalation, a timely refund could also avert high imports of fabrics and fall in capacity utilisation which could result in job losses.

Dyes and chemicals account for more than 30 per cent of the processing charge that attract 18 per cent GST, while the fabric or job work is levied 5 per cent GST, the SIMA appeal stated.

Any delay in refund of accumulated input tax credit could lead to increased import of fabrics, resulting in job losses in the highly vulnerable sectors like power loom, handloom, and processing, SIMA has stated.

SIMA chairman P Nataraj who is also the Managing Director of the KPR Group, has stated that this percentage share in cost escalation is proportionate to the range of accumulation of input tax credit on the sales value, especially in sectors like power loom, handloom and processing.

He has cautioned that there are a few major problems due to certain GST anomalies which need to be addressed immediately in order to bring all stakeholders of the textile industry under GST as well as enable products to remain globally competitive.

According to the SIMA chairman, the Indian textiles and clothing industry has been affected due to continuous recession during the last three years, poor off-take in the global market, the FTA/PTA competitive advantage gained by the competing nations like Vietnam and Bangladesh, as well as high tariff rates imposed on Indian textiles and clothing products in the major textile makers such as EU, US, Canada and China.

This has led to total textiles and clothing exports stagnating at around US$ 40 billion during the last three years, he stated.