Textile industry seeks uniform 5% duty under GST

The textile industry wants to be placed in the lowest duty slab 5 per cent across the value chain under the Goods and Services Tax (GST) regime, which is expected to be rolled out from July this year.

According to M Senthil Kumar, chairman, Southern India Mills' Association, till the GST is rolled out, they hope there will be no changes in the optional CENVAT that is implemented now.

About 60 per cent the Indian textile industry is cotton-based and 80 per cent of textile and clothing exports are also cotton-based.

According to industry representatives, the textile and clothing sector want the lowest duty slab of 5 per cent without exemptions for any segment of the value chain.

The textile industry supply chain is loaded with various taxes on inputs and output, including octroi and entry tax, across the value chain state boundaries before it reaches the ultimate consumer.  Since credit on these levies are not allowable as part of the cost, GST should be set lower to subsume octroi, entry tax, entertainment tax, luxury tax, etc to remove the cascading effect at the distribution stage, the industry points out.

The government has already announced special packages for different segments of the textile industry in June last year and for made ups (an article manufactured and / or stitched from any type of cloth, other than a garment) in December.

Now that the focus has shifted to GST, which is a new tax regime, it is necessary that the industry guards against any adverse impact due to the new tax regime.

Besides, the industry was expecting a special package for power loom sector to be announced shortly but they do not expect any major announcement in the budget, a spokesperson for the industry said.