The Powerloom Development and Export Promotion Council (PDEXCIL) has urged the State government not to increase Goods and Services Tax (GST) rates for any textile products as it would further affect the industry.
In a letter to Chief Minister M.K. Stalin, its chairman M.A. Ramasamy said PDEXCIL catered to the needs of power loom industry that comprised synthetic fabrics and man-made fibre (MMF). The GST council had proposed to correct inverted duty structure from the present 5% to 12% for fabrics and apparels. The letter said increasing the rate would discourage the whole value chain and it would affect a lot of factors associated with it. The letter said earlier there was no VAT on fabrics and 5% tax was imposed after GST was introduced. Increase in yarn price, fuel price and packaging materials had caused hardship to the manufacturers and entrepreneurs who were facing loss. “This has resulted in cut in wages, reduction in quality of products and fall in consumption,” the letter said and added that further increase in rates would worsen the situation in survival of small fabric and garment manufacturers.
The textile industry was providing jobs to 17 million workers in the country which was the second largest employer in the country. Increase in tax would affect millions of workers as manufactures would be pushed to go for job cuts. Most of the power loom units functioned on credit basis and further increase in rates would affect the weavers.
The letter said any hike in rates would discourage producers to diversify their products and enter the field. Hence, considering the above factors, the Centre and State government and GST council should review their decision and find an alternative solution to resolve the issue of inverted duty structure without any increase in taxes, the letter urged.
