GST is the latest buzz of the town. The new tax system is chattered in every corner of textile industry from the mill to trader to the supplier and finally to the consumer. Many reports and presentations have been published explaining the new tax concept with its impacts in both positive and as well as negative ways.
The nation is talking about the burdens that manufacturers and consumers will have to face due to higher GST rates on certain commodities. All round GST is being analyzed all time. Such situation is bound to happen as a tax reform is something that will create chaos and people need expert’s opinion to understand the situation and remodel their structure.
So basically GST as clarified by government is a single taxation system of the goods and services. This taxation system is ultimately going to be beneficial as it has eliminated all other taxes and duties that we used to pay before the roll out of GST. With this GST regime everybody will procure, manufacture and sell only through a defined system. All the services from the vendors will also be considered under the surveillance of GST reform. Thus in this system each and every commodity will be under the scanner creating a transparent module that will facilitate more business opportunities in a structured format.
While focusing on Textile Industry, it is observed that there is a gap in understanding GST, given the fact that there were late reactions by most of the industry associations related to the changes and impacts of the GST. Some of the issues are related to various fibres, for example in case of cotton textile there would be a common GST of 5% till fabric level and at garment level there are two different slabs. Whereas in case of synthetic fibres there is an issue as the GST on synthetic yarn is higher than the GST on fabric. This difference will create an accumulation of GST credits for which till date there is no solution. However I am positive that government will address this issue and provide a solution at the earliest.
All said and done, the government is quite confident and firm on the implementation of GST. They have clearly indicated that GST must be implied and it’s already being rolled out from 1st July 2017. Any corrections or alterations then after will be incorporated and executed as and when it is approved.
If we analyse the growth of manufacturing hub in India since 2012, entire world is eyeing on India as a major contributor for global economy. Whereas Indian investors are only eagerly waiting and holding on their new business ventures with the hope of getting better reforms from government. Though in early 2015 all reforms and government initiative were introduced to boost the manufacturing sector and things just started taking pace there was again a pause due to demonetisation as an excuse. This slowdown was further dragged on by the announcement of GST as various entrepreneurs had little idea on where about sand impacts of GST. Though GST is functional now, the current scenario has not changed much as manufacturers are only focusing on restructuring their system and every investment is sidelined.
But now it’s time to rise as GST regime is very much into place, all the rates and exceptions are announced and the reform of Indian taxation has begun. The Central has clarified its system which is to be accepted and implemented with a positive mindset. There is no going back now, GST isn’t just a concept anymore, but is the hard core reality.
Conclusion:
It’s now time for Indian Entrepreneur’s to kick start new business ventures. Avail various benefits that the country is offering to the manufacturing sector and spin higher profits. The platform is all set for manufacturers as the GST reform is in action and all other policies are also launched. The state governments like Maharashtra, Gujarat, Andhra Pradesh and Jharkhand have come out with economical investment propositions.
It’s now or never for the investors and they must understand the current situation and enact upon these opportunities. As far as business house focusing on export market is concerned there are clear cut guidelines of GST. Also procuring raw materials from different parts of the country will not have multiple taxes and then transforming into value added products will now be much easier. Hence, time has come that each and every investor starts investing in carrying out techno economic feasibility report which will assist them to analysis their project viability. We all know it takes a year or two for a proper execution of any project so it’s now time to take actions and invest immediately. If we Indians do not take advantage of the situation, then there are foreign investors who are just on the border and waiting to invest in a big way in Indian economy and take advantage of Make in India, Skill India and many other new initiatives of Indian Government.
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