Surat Weavers Cry Foul On Spinners Hiking Yarn Price Despite Reduced GST

Surat Weavers Cry Foul On Spinners Hiking Yarn Price Despite Reduced GST

The weavers in Surat are up in arms against the yarn spinning mills for resorting to alleged excess profiteering that goes against the grain of the GST act, according to Mayur J Golwala, member of South Gujarat Chamber of Commerce and Industry.

Earlier in July the government at the centre had introduced an 18% levy on Man-made Fiber (MMF) yarn in the GST regime. At that stage, the weavers petitioned the government that they be entitled to input credit which could offset the high levy percentage.

However, in October, the government reduced the GST on yarn to 12 percent. Despite this six percent reduction, the spinners have not been passing on the benefit to the weaving units. This is the main crux of our grievance, Golwala explained.

He said that the weavers have approached the state-level screening committee for GST and have made a presentation of the situation to the body. They have pointed out that this increase in price of yarn goes against the anti-profiteering act that is built within the GST law.

“The state-level GST screening unit has given us an assurance that all matters related to GST will be resolved before the financial year ending on March 31. The next meeting of the GST council is on January 18. They will take up this issue in the meeting and the successive meetings of the GST council so that the pressing need for checking profiteering is arrested,” said Golwala.

When queried about the extent of the financial straits, Golwala said, “We have to pay 5 percent GST on fabric and in addition pay an increased price for Yarn. This squeezes our operating margins and it is difficult for us to function in such an environment.”

Talking about ability to unite and bargain, the member said, “Front end spinners are few in number. It’s easy for them to unite. Whereas there are 50,000 weavers and getting unity among them is a difficult proposal. Thus we are at a disadvantage.”

The quantum of price rise was also significant with the spinners demanding INR 8 more per kg of the quantity. They attributed the price rise to surge in global crude oil prices. Golwala also happens to be the member of Federation of Gujarat Weavers Association (FOGWA).