The Tamil Nadu Textile Merchants Association has said that the increase in GST on textiles and garments from 5% to 12% from January 1, next year would impact the industry badly and render crores of people dependent on this industry jobless.

In a representation to the Prime Minister Narendra Modi, Union finance minister Nirmala Sithraman, Union minister for textiles and others, secretary of the association, Ashraf Tayub said that the recommendations of the 45th GST council to increase the GST on textiles could have a colossal negative impact and affect the total textile and garment industry and lead to the closure of lakhs of factories and shops. This in turn could cause unemployment to crores of people dependent on this industry.

Eighty five per cent of the textile and garment shops are in the small and medium sectors and have a turnover of less than Rs 40 lakh per annum and they are not in the GST ambit. But, all of them pay GST on their purchases. The existing 5% GST is fully borne by the traders and industries and not passed to the customers. If the GST is increased, it would lead to inflation and they would not be able to compete with the larger stores and would be forced to close down.

Small and medium textile and garment retailers constituting about 65% of the Indian market are already suffering due to competition from the conglomerates, which have penetrated even the smallest cities and towns.

This is an industry which employs lakhs of uneducated, illiterate and physically challenged people. Job losses in this sector could impact other trades like restaurants, hotels, travel and packaging.

He said that the government should increase the threshold limit of GST to more than Rs 2 crore turnover and allow inter-state transportation of goods for non-GST small traders and industries also. This would boost free sales across the country, he said.