Indian FM assures textile sector of discussing GST hike in Council

The meeting was attended by several textile and garment industry representatives from Gujarat, Karnataka, Maharashtra and Tamil Nadu.

The representatives of Gujarat Garment Manufacturers Association, Gujarat Chamber of Commerce and Industry (GCCI) and other industry organisations met the minster along with Gujarat BJP president CR Patil. They explained that higher GST rate may hamper businesses in MSME sector. Saurin J Parikh, chairman of Textile Committee of GCCI told Fibre2Fashion’s reporter that garment manufacturers will face hardships due to higher GST from January next year. “It will lead to tax evasion as higher tax of 12 per cent will discourage manufacturers to comply with tax rulings.”

An industrialist from Ahmedabad told Fibre2Fashion that cheaper garments are sold at lumpsum price, so 5 per cent GST was to be absorbed by retailers because they cannot charge GST extra. However, with the increase in GST, it will not be possible to absorb 12 per cent GST in prices. So, tax evasion will be encouraged. 

Parikh said that the finance minister did not assure to redress the problem. But she assured them that she will put up the matter in the GST Council meeting. Therefore, textile sector needs to be ready to for new uniform GST regime in which upstream industry, specially, large- and mid-sized industry units will have better cushion as they can get Input Tax Credit (ITC) refund. However, manufacturers will have to face higher tax in case of garments with the price tag of over ₹1,000.

Fibre2Fashion News Desk (KUL)