The Powerloom Development and Export Promotion Council (PDEXCIL) urged the state government not to increase the Goods and Services Tax (GST) rates for textile products, as this would further affect the industry.
In a letter to Chief Minister MK Stalin, its chairman, MA Ramasamy, said that PDEXCIL meets the needs of the power loom industry including synthetic fabrics and man-made fibers (MMF). The GST council had proposed to correct the reverse tariff structure of 5% to 12% for fabrics and clothing. The letter said increasing the rate would discourage the entire value chain and affect many factors associated with it. The letter said earlier that there was no VAT on fabrics and that a 5% tax had been imposed after the introduction of the GST. The increase in the price of yarn, the price of fuel and packaging materials had caused difficulties for manufacturers and contractors who were facing losses. “This has resulted in lower wages, reduced product quality and lower consumption,” the letter said, adding that a further rate hike would worsen the survival situation of small fabric and clothing manufacturers.
The textile industry provided jobs for 17 million workers in the country, which was the country’s second largest employer. Raising taxes would affect millions of workers as manufacturers would be pressured to cut jobs. Most loom units operated on credit, and a further rate hike would affect weavers.
The letter said any rate hikes would discourage producers from diversifying their products and entering the business. Therefore, considering the above factors, Central and State government and GST board should reconsider their decision and find an alternative solution to solve the problem of reverse duty structure without any increase in taxes. , urged the letter.