Tirupur, the knitwear hub of India, is the latest to stage protests against the imposition of 18 per cent Goods and Services Tax (GST) on printing, embroidery, button fixing, checking, ironing and packing. There were around 2,000 units of the knitwear and readymade garment cluster that joined in the agitation last week.
The textile and garment traders, who took part in the protests, feel that 18 per cent GST is a huge burden on them which may eventually force them to shut their business operations. The manufacturers also state that GST Council’s decision to put knitting, dyeing and compacting under 5 per cent GST rate, is not a good idea as it will impact the small job work units.
The traders termed the 18 per cent GST on these jobs as ‘uncalled’ and ‘unprecedented’. It may even result in a financial crisis in the industry as the cluster functions under the 90 days credit format (in the value chain).
In view of the sluggish global economic situation, operating on credit basis has become popular and friendly amongst the foreign buyers. This system allows buyers to make payments for exported goods from 90 to 150 days from the date of shipment. The implementation of GST will take away this advantage.
Factory owners in Tirupur are also worried about how they would file for GST return and whether they would need to appoint a person specifically for that. This might further increase their expenses.
In another development, traders from Gujarat have called off their agitation till the review meeting of GST Council which is slated to be held on August 5.
