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Demand for lower GST rates on MMF & Yarn

The Confederation of Indian Textile Industry (CITI) has urged the finance minister Arun Jaitely for reducing GST rates on man-made fibres (MMF) and yarns from 18 per cent to 12 per cent otherwise this would affect the MMF textile segment prospects in the country in a big way. This will come as big blow to […]

Demand for lower GST rates on MMF & Yarn

The Confederation of Indian Textile Industry (CITI) has urged the finance minister Arun Jaitely for reducing GST rates on man-made fibres (MMF) and yarns from 18 per cent to 12 per cent otherwise this would affect the MMF textile segment prospects in the country in a big way. This will come as big blow to small fabric manufacturers in powerloom, knit and processing segments and prevent seamless flow of input tax credit and allow breakage of value chain, CITI chairman, J Thulasidharan said.

He said MMF and synthetic textile manufacturers will not only lose profit but also gradually start losing grounds against competitors like China, Bangladesh, Vietnam and Cambodia those enjoy fiscal and non-fiscal advantage in their countries compared to India. “Around 166 countries have GST in place with lower slab compared to what India has announced.”

Powerloom accounts for more than 86 per cent of the total man-made fabric production in India while rest comes from other segments like handloom, hosiery and mills. If rates, are not reduced then there will be flooding of the fabrics from China which would wipe out powerlooms and other SME fabric manufacturers from business. Powerlooms employ around 65 lakh workers in 5.5 lakh units spread across the country.

CITI also highlighted that SMEs and those who do not have composite mills are going to suffer from excessive competition and high cost. These players have majority share in fabric production of the country. Therefore, he requested that government must ensure lowest rates on raw materials essentially for man-made sector to hold the investment in the industry and to encourage production.

The confederation has requested that the highly labour oriented garment and made up segments should also be considered under the 5 per cent GST slab of service tax as the job work related these segments still come under 18 per cent service tax slab.

– Apparel and Textile News, Apparel Talk, Indian Apparel

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