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Reduced GST On Manmade Fibres & Yarns To Help Textile Sector: SRTEPC Chairman

• By  Henry Dsouza
• October 13, 2017

The recent reduction of GST on manmade fibres and yarns from 18% to 12% will provide a major relief in unblocking working capital due to the huge accumulation of non-refundable input tax credit (ITC), Synthetic and Rayon Textiles Export Promotion Council (SRTEPC) Chairman Narain Aggarwal has stated.

Initially, manmade fibres and yarns were slotted under a GST slab of 18% while fabrics were slotted under a GST slab of 5%, with a condition of no refund of ITC at the fabric stage. This had caused a huge accumulation of non-refundable ITC with weavers, besides blockage of working capital, but after reduction of GST to 12%, this problem will be mitigated to a large extent and become more manageable, he stated.

According to him, the recent reduction in GST would benefit both spinning and power loom sectors which manufacture as well as supply yarn to the textile industry. He stated that as soon as the benefit is passed on to the entire downward value chain of the textile industry, Indian textile products in the global market will be more competitive. It will also help to ensure clothes will become more affordable to poor people in India.

The release of held-up refund of IGST paid on goods exported in July from October 10 onwards has come as a big relief to merchant exporters who have put in huge working capital, he stated, adding that the refund of the huge amount will again be invested into increasing exports.

Merchant exporters would now have to pay only a nominal GST of 0.1% to procure goods from domestic suppliers for export, he stated.

However, power loom sector owners believe that spinners and yarn manufacturers will benefit due to reduction in GST from 18% to 12% on yarn and manmade fibres, since both segments would get ITC refunds.

Textile Excellence