Federation of Industrial and Commercial Organisation has written to Finance Minister, Nirmala Sitharaman and welcomed the recommendations of Fitment Committee of reducing GST rates on manmade fibres from 18 per cent to 12 per cent.

However, the industry has demanded from the GST Council to bring the entire textile value chain under 5 per cent GST rate.

"Five per cent GST across their entire textile chain will completely eliminate the issue of inverted duty structure. However, if all fabrics and apparel below Rs 1,000 are moved to a 12 per cent duty it would have a dramatic impact on consumption. Since a majority of saris, tailored fabrics and apparel that are sold in India are under Rs1,000 price and are currently in the 5 per cent GST slab, a rate hike of 7 per centwould have a large impact on overall consumption," said Ajit Lakra from FICO.

This rate increase would impact the most vulnerable income groups that comprise of the bulk of the domestic demand. The demand destruction in turn would have a very large impact of manufacturing," said Ajit Lakra.

He also said that textile being one of the largest job creators, such a sudden move could also lead to job losses, especially since the industry is particularly vulnerable at the moment.

"The entire industry is currently reeling from the Corona virus pandemic. Business has been hugely impacted as consumers are unwilling to go to crowded places and an atmosphere of fear and uncertainty is prevailing Over the next few months demand could be impacted by as high as 30-40 per cent."

 16 Mar 2020, 10:11 AM