Indian apparel industry has expressed deep sense of disappointment and anguish at the recent announcements from the GST Council, which indicated that with a view to address the issue of inverted duty structure in the textile industry, it has proposed to implement the above on fabrics and garments with effect from 1 January 2022.
Although no formal communication has been received, the applicable rates will be enhanced and will match the rates at present for the goods above the price of Rs.1,000.
Prestigious trade bodies like Federation of Hosiery Manufacturers’ Association of India (FOHMA), West Bengal Hosiery Association (WBHA), The Bengal Hosiery Manufacturers’ Association (BHMA), Chamber of Textile Trade & Industry (COTTI), West Bengal Garments Manufacturers and Dealers Association (WBGMDA), Eastern India Garment Manufacturers & Exporters Federation (EIGMEF) and Bangla Readymade Garments Manufacturers & Traders Welfare Association (BRGMTWA) have raised the issue strongly and urged the Central and State Governments and GST Council to review their decision and maintain the current status quo of the GST rate on the hosiery, knitwear fabric and garment industry.
The organisations are of the view that the stated objective of such a change is the anomaly of an inverted duty structure faced by a small section of the industry.
It is indeed disturbing that merely to correct an anomaly faced by one segment of the industry, which constitutes not more than 15 per cent of the total Industry, the Government is proposing to implement inverted duty structure which will affect nearly 80 per cent of the final products to the consumers (garments over Rs. 1,000 were in any case at 12 per cent GST).
In a statement, the trade bodies said that the domestic hosiery knitwear fabric, textile traders and garment industry are still struggling to revive post the pandemic. Most indicators point to the end of 2022 as the earliest that the industry can hope to achieve its pre-COVID levels. Any increase of taxes at this juncture would be disastrous for the industry at this point of time.
“Raising the taxes will again increase the temptation of such fringe players to revert back to the informal sector. This will not only impact the Government revenue collection under GST, but also impact its other taxation streams,” said Alamgir Fakir, President, BRGMTWA & Director, Dynax Apparels.
“We believe that a far more beneficial and reasonable solution, which will not only resolve the inverted duty structure anomaly but also give a fillip to the industry, is to make the entire value chain subject to a 5 per cent rate. We are currently undertaking a detailed Economic Study through India’s most respected agencies, which indicates that the drop in revenue for the Government if the entire chain were to be taxed at 5 per cent will be negligible, and in fact could even result in a higher revenue collection with greater compliance and consumption impetus,” said Sanjay Kumar Jain, Former Chairman, CITI & Managing Director, TT Limited & Vice President FOHMA.
“We also urge the Government to consider the cost to the Government as well as the industry to create the 2 million jobs which could be lost due to this increase in GST rates, as opposed to the marginal drop in revenue, if any,” said Vijay Kariwala, Senior Vice President, WBGMDA.
Source : https://in.apparelresources.com/