In Andhrapradhesh

GST leaves textile sector worried

GMT 16:53 2017 Friday ,07 July

Sriyadithatextile - GST leaves textile sector worried

GST effect in Andhrapradesh

VIJAYAWADA: With a clear ‘No’ to plea for GST exemption on textiles from the GST Council, all the stakeholders in the textile industry are the most unhappy lot in the country. Man-made synthetic yarn has been levied a tax of 18 per cent. Man-made fabric has been taxed 5 per cent. The Central government has also imposed 5 per cent tax on cotton yarn and fabric, which is likely to hit small non-integrated textile companies which buy fibre to weave fabric. Though the non-integrated textile firms make up more than 80 per cent of the textile industry, they are at a disadvantaged position since they will not get the refund of excess GST on input. 

Since every aspect involved in textile sector, from production of yarn to production of fabric, from sale of cloth to sale of readymade garments, people involved in every level of textile business have hit the streets in protest across the country, including Andhra Pradesh. 

“It is a matter of bread and butter for us. Naturally, we have to protest to safeguard our interests. The new GST regime, apart from increasing the prices of the final product, makes it mandatory to change the entire system, how the sector functions and it may render many jobless,” said Andhra Pradesh Textile Federation president Busireddy Malleswar Reddy. 

The APTF has been opposing the levy of 5 per cent tax on textiles for a very long time. M Srinivas, owner of Sai Baba Textile Agency in Vastralatha Market Complex, wanted to know when taxes are already being levied on yarn, dyes, at the processing stage, on painting and embroidery, what is the point of imposing tax on the finished product (textiles) separately.

Unlike other businesses, textile sector is more dependent on capital, rather systematic cash transactions. Textile businessmen have to arrange their own capital for business. They do not have any security or an assurance of a pension unlike salaried employees. They don’t have a fixed salary and their remuneration is completely based on their sales.

Under the new tax regime, every transaction, be it at wholesale level or the saree business done by housewives for extra family income has to be accounted and transaction records need to be produced. As most of the people employed in the sector are ignorant of all these rules and several uneducated in bookkeeping, the new system puts them at severe disadvantage. “It will render many jobless, which is not good for the textile sector as a whole,” said Vastralatha general secretary B Narasimha Rao.  

While people from economically weaker sections buy cloth for garments, the upper class goes for readymade products. If the textiles are taxed it will directly affect people from lower and middle classes. “The government says ‘Roti Kapada Aur Makaan’. What will the poor people wear if you tax textiles?” questioned Srinivas When asked if the shops in Vastralatha complex are giving any discounts to clear the stock before the GST rollout, Singh, owner of Rekha Silks, said none of the shops are doing that. Situation is no different in other cloth and readymade shops in One Town. 

However, it is entirely a different story in mid-to-high end shopping malls in two town area of Vijayawada. Fashion retailers like Lee, Reebok, Levi’s, United Colours of Benetton, Pantaloons and FBB are giving attractive discounts on apparels which a shopaholic is unlikely to miss. Denim companies Levi’s and Lee are both giving similar yet lucrative offers - Buy 2, get 2 free. United Colours of Benetton and Reebok are offering up to 50 per cent discount. The offer which Pepe Jeans has in store for its customers is ‘Buy 3, get 3’.  

While the end of season sale usually starts off during of July and continues till the end of August, cloth retailers advanced the sale by a month this year, thanks to GST. Fashion at Big Bazaar in PVP Square is offering flat 50 per cent discount on all its products. On being asked Raja Ramesh, store manager of FBB, as to how the GST is going to affect the brand, he said, “Actually on the contrary, it has helped to create buzz among customers.”

Soch, another fashion retailer in PVP Square, selling ethnic outfits, is offering up to 40 per cent discount till July 31. On asking whether new taxes will be introduced on the stock already up for sale in the outlet, its manager Suresh said the old stocks will continue to be sold at the current price with current taxes. The new stocks will hit the market with the new tax regime. Before the end of season sale, Soch is confident that it will be able to push 70 per cent of its stocks. On asking whether the new tax regime will lead to less number of customers in the outlet, he said at first people would think about it but finally accept it.

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