120% increase in GST on Textiles unfortunate (Telangana State Federation of Textile Associations)
Hyderabad 30th Dec 2021: Consequent to the Central Government announcement of increase in GST from 5% to 12% (120% increase) on textiles from 1st January 2022, the textile traders of Telangana held an Emergency General Body Meeting on 11thDecember 2021 at Hotel Raj Comfort Inn, Secunderabad where more than 100 representatives of cloth merchants associations from 33 Districts of Telangana were in attendance. The meeting was chaired by Sri Ammonabolu Prakash, President, Telangana State Federation of Textile Associations.
The meeting, in one voice, opposed increase of GST on textiles on following grounds
1. Roti, Kapada, Makkan is the slogan of every political party. Ever since Independence, textiles were never taxed and was always covered under exempted goods
2. Textile trade is carried out in all parts of the country including remote villages. 80% of the people in this trade are un-organized and less educated. Women are working in this trade in urban and rural areas. They just earn a minimum amount per month and largely their family depend on this income. They all choose this business to earn their livelihood because it was a free trade business and it does not require any skill.
3. Textile trade is a credit oriented business, particularly, the wholesale. After sale of goods, the payment for the same will be received only after 6 months. Whereas, the trader, under GST, needs to pay tax immediately. This will result in tremendous pressure on the trader in the form of working capital. Traders have to reinvest working capital for regular business.
4. Design change in fabric is very frequent since customer always looks for new design. Once the design becomes obsolete, it will become a dead stock. To sell the dead stock, the trader is forced to sell the same under cost and claiming of input is a very difficult task.
5. As a result of massive price increase of Raw Material, such as Cotton, Yarn, Fabric, Colour, dyes, Fuel, Packaging Materials, Transportation, etc. the textile industry is already seeing a 15-20% job losses, wage cuts, social and personal traumas due to COVID-19. Increase of another 7% to the prices lead to a very severe drop in consumption thereby the small traders are forced to shut down their shops. This leads to huge unemployment.
6. Textile trade is next to agriculture giving employment, directly or indirectly, to more than 1 crore people in Telangana alone, which includes families of traders, gumasthas, hamalis, tailors, cart pullers, Angadia, transporters and self help groups who are dependent on this trade. During the pandemic, many small & retail shops were shut down and this increase in GST will further worsen the situation
There are about 75,000 to 1,00,000 textile traders in Telangana. Any increase in GST on Textiles at this juncture can end up in the CLOSURE of lakhs of small retail shops, vendors across the State of Telangana.
The Hon’ble Supreme Court in its order in the matter of textile manufacturers request, asked the Central Government to cure the decease. But the Government, has chosen surgical strike on textile traders.
To sum up the above, it is only desirable that the increased rate of GST on textiles be rolled back to 5% failing which the trade will collapse creating chaos and huge un-employment.