The recent debate over the Goods and Services Tax (GST), which is likely to be applied soon, is crucial for the future growth of Indian Textile Industry. The Mill Owners’ Association wishes that the Indian Government should take into account the ground realities while fixing the GST rate for the textile industry.
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Indian textile industry, being the second largest employer after agriculture, holds a special place in the Indian economy, hence for rapid growth of the economy; the development of the textile industry is crucial. It may be noted that at present there is no excise duty on natural fibres like cotton and woollen hence GST will incur an extra cost to the companies and consumers whereas the synthetic and artificial fibres will receive credit under GST, which will lead to lower input costs and higher cash flow from various companies.
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The industry has heaved a sigh of relief on jettisoning the earlier suggested RNR (Revenue Neutral Rate) of 27% and has recommended a rate of 15% to15.5%. The recommendation of a lower rate of 12% may be a welcome step for some industries, but certainly not in the case of textile industry, which is at present falls outside the purview of excise duty net as stated earlier.
The suggested lower rate will be a huge jump that will build tremendous consumer resistance. As a result, the textile industry may suffer from the heavy accumulation of unsold stocks. Thus, GST on yarn, fabrics and garments must be kept at a very low percentage, which will not only help the textile industry but also boost the economy.
