“The announcement of reduction of GST rates for Man-Made Fibre Yarns and its products, from 18 percent to 12 percent by Mr. Arun Jaitley, Chairman, GST Council, has met a long pending demand of the textile industry”, stated Mr. Sanjay K. Jain, Chairman, Confederation of Indian Textile Industry (CITI). It will help strengthen the entire textile value chain and make Indian Textile Industry globally more competitive.
“I would first like to thank Mr. Jaitley, Head of GST Council and Ministry of Finance, Ms. Smriti Zubin Irani, Minister for Textiles and all the senior dignitaries of both Ministries and Members of GST Council for making it a big reality! He also stated that CITI being the apex industry chamber of the textile and clothing industry of India, there was a big responsibility on the shoulders the of office-bearers of CITI to get rid of this anomaly at the earliest. This announcement has brought a great sigh of relief to the entire textile industry and I once again thank everyone who pushed for the change, on behalf of the entire textile industry” he said
Mr. Jain further stated that the announcement has sorted out a big issue of inverted duty for the MMF products as it was causing serious issue of escalation of the cost of synthetic products which was further leading to cheaper imports from the competing countries like China and Indonesia. As of now, there is no refund of ITC at fabric stage and under post-GST regime, with abolition of 12.5% Countervailing Duty and 4% Special Additional duty, the import has become much cheaper option than sourcing fabrics from the domestic market.
CITI has made several representations to the Finance Minister, GST Council and the Textile Minister to immediately reduce GST rate on MMF Yarn and its products to 12 percent from 18 percent to rein in inflation of MMF products and to safeguard domestic producers from getting defunct. Mr. Jain said that reduced GST rates would greatly benefit not only the spinning and power loom sector but would also support the initiative of Make In India and achieve the national objective of creating more employment opportunities. He also stated that this step of the government will also help the industry to cloth the poor masses of the nation at an affordable cost.
The Chairman also thanked the GST Council for giving relief for the blockage in credit of exporters that affects the cash liquidity of the exporters. He hailed the announcement of processing the refund cheques for July exports by 10th October and August exports by 18th October and also the decision of creating an E-Wallet while from 1st April 2018. He stated that this would resolve the problem of working capital getting blocked and benefit the exporters. He added that the suspension of reverse charge mechanism till 31.3.2018 will benefit small businesses and substantially reduce compliance costs. Mr. Jain also welcomed the announcement of easing the compliance burden on medium and small taxpayers and increasing the eligibility of Composition Scheme under GST from Rs.75 lakhs to Rs.1 Crore. Extending the tax exemption for 100% EOU units, Advance Licensing Scheme and EPCG Scheme and allowing the merchant exporters to purchase with 0.1% tax payment upto 31st March 2018 are a few more announcements that benefit the textile industry.
He also expects that the GST Council soon consider refund of the accumulated Input Tax Credit at fabric stage especially the processed fabrics and also mandate the duty drawback committee to recommend appropriate duty drawback rates and RoSL rates to sustain the export performance. He feels that the Government should extend the transitional provision of giving the pre-GST Duty Drawback and RoSL rates for another 6 months or till the new calculated rates are announced.