GST hike on textile fabrics: An upset Surat industry mulls widespread protests
The textile traders of Surat are up in arms against the Central government following the decision to hike the Goods and Services Tax (GST) on textile fabrics from 5 percent to 12 percent. Various trade associations are planning widespread protests saying the move will adversely impact an industry that is already facing stiff competition from the imports of Vietnam, Sri Lanka and Bangladesh.
The industry representatives are also planning to call on Union Minister of Textile, Commerce, and Industry Piyush Goyal, Finance Minister Nirmala Sitharaman and, hopefully, Prime Minister Narendra Modi, too, from next week, to submit their requests to continue with the old GST regime.
A member of a textile industry trading body, on the condition of anonymity, even has warned of indefinite strikes if their requests are not looked into by the Central government.
The Federation of Gujarat Weavers Association (FOGWA) had called a meeting with over 70 small associations to discuss the future course of plan. Similarly, the Federation of Surat Textile Traders Association (FOSTTA) and the Textile Processing Unit Association had called a meeting of its members to decide further action.
All three parent bodies of the textile industry, along with the Confederation of All India Traders (CAIT), had jointly carried out a meeting in which it was decided to oppose the GST duty hike that will be effective January 1, 2022.
“The value chain in the textile industry begins from the manufacturing of fibres, then to yarn, followed by fabric and processing, and then garmenting and value-addition. Currently, the GST structure on different segments of the textile industry is 18 percent on the raw materials and thread, followed by 12 percent on yarn manufacturers, 5 percent each on textile weavers (power loom industry), textile traders, processing units, and value-addition on the finished fabrics. The new notification says 18 percent GST duty on raw materials and threads, and 12 percent on yarn manufacturers, weavers, traders, processing units, and value addition,” explained FOGWA president Ashok Jirawala.
The move will impact these segments that employ lakhs of people. “The textile industry is the largest employment generating sector in the country. The power loom industry consists of around 24 lakh loom machines, of which around 7.5 lakh alone are in Surat. The GST hike will definitely affect the power loom industry, which is also a key player in the economy of Surat. The consumers will end up paying around 20 percent more than the current cost. This will also result in lower demand and consumption,” he added.
“There are a lot of women in Surat who financially support their families by doing value-addition such as stone and mirror work, hand-made embroidery, etc on the finished fabrics. If the 12 percent hike is not reversed, these women will lose their livelihood and their family will also suffer,” cautioned FOSTTA Secretary Jay Lal.
FOSTTA chairman Manoj Agrawal warned against malpractices of tax evasion following the GST hike the finance ministry notified on November 18.
He added that they have written to the Prime Minister and the Chief Ministers of Rajasthan and Odisha, from where a large workforce is employed in the sector.
“The entire textile industry has a large workforce from Odisha, Rajasthan, UP, Bihar, etc. We have written to Odisha CM Naveen Patnaik on November 19 to take interest as over 5 lakh people from the state work in the textile industry in Surat. We have also made representations to Rajasthan CM Ashok Gehlot on November 25, during his Surat visit, as lakhs from his state work in the trading, packaging and embroidery units of Surat,” he said.
The traders have also requested Gujarat BJP president and Navsari MP CR Paatil to intervene in the issue.
Agrawal added that all the associations of the textile industry will attend a meeting Monday with the Federation of Indian Art Silk Weaving Industry (FIASWI) in Surat to decide the future course of action.
Surat CAIT president Pramod Bhagat backed the industry demand against the revised GST structure. “The industry will suffer a great loss as the demand would drop after the hike. The textile industry is also at a disadvantage from the imports from Vietnam, Sri Lanka and Bangladesh as India has a free trade agreement with them. Naturally, cheaper fabrics will be in higher demand,” he said.
He further added that they have support from different traders’ association bodies in Delhi, including the Delhi Hindustan Mercantile Association, against the GST hike. “We are having a meeting with the trade bodies of Delhi and FIASWI national body tomorrow (Sunday) to discuss this issue,” he said.