India’s Finance Minister Nirmala Sitharaman has assured the representatives of textile sector, specifically garment industry, that she will discuss the issue of GST hike on apparel in the next GST Council meeting. However, she did not commit to redress the issues raised by the industry leaders at their meeting with the Minister held in New Delhi. The meeting was attended by several textile and garment industry representatives from Gujarat, Karnataka, Maharashtra and Tamil Nadu.
The representatives of Gujarat Garment Manufacturers Association, Gujarat Chamber of Commerce and Industry (GCCI) and other industry organisations met the Minster along with Gujarat BJP President CR Patil. They explained that higher GST rate may hamper businesses in MSME sector. Saurin J Parikh, chairman of Textile Committee of GCCI told that garment manufacturers will face hardships due to higher GST from January next year. “It will lead to tax evasion as higher tax of 12 percent will discourage manufacturers to comply with tax rulings.”
An industrialist from Ahmedabad told that cheaper garments are sold at lumpsum price, so 5 percent GST was to be absorbed by retailers because they cannot charge GST extra. However, with the increase in GST, it will not be possible to absorb 12 percent GST in prices. So, tax evasion will be encouraged.
Parikh said that the Finance Minister did not assure to redress the problem. But she assured them that she will put up the matter in the GST Council meeting. Therefore, textile sector needs to be ready to for new uniform GST regime in which upstream industry, specially, large- and mid-sized industry units will have better cushion as they can get Input Tax Credit (ITC) refund. However, manufacturers will have to face higher tax in case of garments with the price tag of over Rs.1,000.