Textile and clothing exporters, especially those in the Micro, Small and Mediumscale Enterprises (MSMEs) category, have welcomed the GST relaxations announced recently.
The expansion of the Composition Scheme from the turnover threshold of Rs. 1 cr to Rs. 1.5 cr will be a relief to several small-scale tax payers. They would now have to pay the tax on a quarterly basis and file the returns annually.
The small-scale tax payers who were so far unable to file the returns on time would benefit from this. The GST exemption limit had also been increased from Rs. 20 lakh to Rs. 40 lakh. Units catering to the domestic or export market and have turnover of less than Rs. 40 lakh will now be exempted. There are many such units in the knitting, embroidery, printing and stitching activities and these do job work for larger units.
Further, RBI decision to permit for one-time restructuring of existing loans, not exceeding Rs. 25 cr to MSMEs classified as Standard will be a big relief to financially stressed garment exporting units. The industry is also been demanding RBI to treat MSMEs separately and exclude them from following Basel III norms, which is meant for corporate units.
Meanwhile to curb textile imports, the government raised the basic customs duty (BCD) from 10 per cent to 20 per cent on: 298 man-made fabric (MMF) fabric lines w.e.f. Oct. 27, 2017; 5 Silk fabric lines w.e.f. Feb, 2, 2018; and 504 lines w.e.f. July 16, 2018, comprising 22 fabric lines, 383 apparel lines, 75 carpet lines, 9 made-ups and 15 other lines. The government has imposed anti-dumping duty on import of linen yarn from China and nylon filamentyarn from Vietnam and the EU w.e.f. Oct. 19, 2018 and Oct. 6, 2018 respectively.
For the last one-year, the industry, especially MSME exporting units were affected further due to demonetization and implementation of GST, apart from prevailing adverse factors both domestically and externally. So, this would help the small or medium scale companies and encourage growth in the textile and clothing industry.
