Mr. J. Thulasidharan, Chairman of the Confederation of Indian Textile Industry (CITI), has welcomed the announcement made by the Union Finance Minister to keep the GST rates for all natural fibres, including cotton, cotton yarn, fabrics and readymade garments, valued below Rs. 1,000 at five per cent. He has complimented the Government for keeping the rates at a low level so that the textile sector, especially cotton-based products, can grow faster. He observed: “The new rates will help us to prepare ourselves for the newer regime as rates for cotton and natural fibres are in sync with our expectations”.
The CITI Chairman has expressed his gratitude to Ms. Smriti Zubin Irani, Textile Minister, and said: “On behalf of the CITI committee members and textile industry, I extend my gratitude and appreciation to the Textile Minister for keeping her promises and accommodating the industry demand for 5% GST, especially for cotton and natural fibre-based textile items”.
Taking a cautionary note, he has observed that 18% GST rate levied on man-made fibre and synthetic yarn would have inverted duty structure problem as the fabric would attract only 5% GST rate. The high rates announced for MMF fabric and yarn, dyeing and printing units, embroidery items at 18 per cent would lead to an increase in input costs and adversely affect the entire textile value chain.
The Indian textile and apparel sector, which is the largest employment provider has been facing huge competitive challenges from neighbouring textile producing countries like Bangladesh, Vietnam and China. Keeping the tax rates high will not only escalate textile inflation but will lead to cheap imports from these countries. This will render the Indian manufacturing sector unviable to operate.
The textile sector is suffering from various disadvantages like high energy costs and infrastructure bottlenecks. Keeping the rates of key inputs at a higher level will further affect the competitiveness of the sector.
Mr. J. Thulasidharan has urged the Government to reconsider the rates on MMF products. India is already suffering a huge competitive disadvantage in the global textile market as the MMF-based textile products are attracting higher rates of import duty. Keeping the GST rates at this rate will undoubtedly cripple hundreds of small and medium synthetic textile manufacturers.
He has also appealed to the Government to exempt textile jobs from the service tax as it would benefit the predominantly decentralized and MSME nature of the industry, especially the powerloom, knitting, processing and garmenting sectors.