Synthetic Textiles To Be 5-7% Cheaper From August

Synthetic Textiles To Be 5-7% Cheaper From August

The company will offer jobs to about 1,800 skilled youth, Minister KJ George said, promising the state's help for its early commissioning.

Synthetic textile manufacturers are planning to cut the prices of their products by at least 5% from August following the government's decision to reduce the effective GST (goods and services tax) rate on its raw materials by 7% from July 27.

The GST Council in its meeting last week had decided to allow input credit on manmade fabric equivalent to 7%. This will provide a level-playing field to synthetic textile manufacturers through a uniform tax rate on the entire value chain. The move will cut effective GST on manmade (synthetic) fabric to 5% from 12% earlier. The revised GST rate is applicable from July 27.

As of now, all textile raw materials, including cotton yarn and its fabric and synthetic yarn attract 5% GST. But synthetic fabric manufacturers were forced to pay 12% duty without having any opportunity to claim a refund of duty difference. This means the synthetic fabric was the only product in the textile value chain with 12% of GST. India produces around 4 million tonnes (mt) of synthetic yarn annually. Considering synthetic textiles' major consumption in the lower class, a 5% price cut would bring in a big respite for consumers. The GST cut will also help clear backlog of nearly Rs 10 billion of duty differential which the synthetic textile industry was demanding from the government. Trading between Rs 140-150 a kg currently, synthetic yarn prices remained volatile in the last one year due to range bound crude oil prices.