News >> Textile industry expects growth with GST rate revision

Textile industry expects growth with GST rate revision

The Indian textile industry is hopeful of growth with revision in the GST rate announced at the 22ndmeeting of the GST Council. The change in GST rate will strengthen the entire textile value chain and make textile industry globally more competitive while boosting electronic payment of taxes, according to various textile industry associations.

"By announcing reduction of GST rates for MMF yarns and its products from 18 per cent to 12 per cent, the GST Council has met a long pending demand of the textile industry. 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," said Sanjay K Jain, Confederation of Indian Textile Industry (CITI) chairman.

With better GST rates for cotton, MMF and blended sector, Indian Texpreneurs Federation (ITF) is also expecting a boost in volumes. "With growing domestic demand, Indian textile industry can expect improvement in utilisation levels in the short term and also more investments in weaving and processing sectors in the medium term. By this change, credit blockage will be very minimal to weaving sector, and cost difference will be absorbed throughout the value chain in a uniform manner without impacting the financials of any sector," said ITF convenor Prabhu Damodaran.

The government has tried to resolve the liquidity issues faced by the exporters. "The announcement of dates for processing the refund cheques for July and August exports and also the decision for refunding a notional amount for the remaining months and later adjust the amount in the e-wallet April 1, 2018, would resolve the problem of working capital blockage and benefit the exporters," P Nataraj, chairman of The Southern India Mills Association.

Measures like exempting export promotion schemes like advance authorisation scheme; EPCG from the payment of GST up to March 31, 2018 will lead to a spurt in investments, according to Ujwal Lahoti, chairman, The Cotton Textiles Export Promotion Council.

"We have requested for higher rate of duty drawback rate after including the embedded taxes like transportation of raw materials and input, usage of petro products, for generation of electricity etc., which were not taken into account earlier mainly to enhance the competitiveness and also to protect SME exporters. As the exporters have to commit the future orders only based on the availability of duty drawback and other measurers, an immediate announcement of increase in duty drawback would be much helpful to restore the confidence of exporters and reinvigorate the growth trajectory," said Raja M Shanmugham, Tiruppur Exporters' Association president. (RR)

(Source: fibre2Fashion, October 10, 2017)