The Confederation of Indian Textile Industry (CITI) on July 3 petitioned the government to cut GST rate on manmade fibre and yarn to 12 per cent from current 18 per cent. claiming the higher levy will pressurise Indian producers to source yarn and fabrics at a cheaper rate from China and Indonesia.

The Confederation of Indian Textile Industry Chairman J Thulasidharan, in a missive to Finance Minister Arun Jaitley, Textile Minister Smriti Irani, textile secretary Anant Kumar Singh and Revenue Secretary Hasmukh Adhia, sought the reduction of the tax rates on man-made fibre (MMF)/synthetic fibre and yarn GST rates to 12 per cent.

The synthetic sector is struggling due to factors such as high price, higher cost of manufacturing on account of high input prices and competition from China, South Korea, Indonesia and Thailand. CITI said that mill gate prices of MMF/synthetic fibre and yarn are higher in India compared to China, Indonesia and South Korea and these countries have lowest tax and high export incentives to produce MMF textile goods in the global market.

“Therefore, 18 per cent GST rate on MMF/yarns will have great ramification on the India’s MMF fibre and yarn industry business prospects,” the CITI Chairman said, adding that small and medium enterprises and unorganised mills will face severe challenges as their profits are very low. He added that the SMEs of MMF/synthetic fibre and yarn may not be able to withstand the market pressure for more than three months with 18 per cent GST as the rate on MMF, is highest among the major textile producing and supplying countries.

“Disadvantage… will keep surmounting as India’s free trade agreements with Association of South East Asian Nations and South Asian Free Trade Area will allow imports of these items from countries like Indonesia, Thailand and Bangladesh which offer MMF textile goods at low and cheap prices,” the CITI chairman said.

Source: Indian Express