COIMBATORE: The decision to consider a Goods and Service Tax (GST) revision for the decentralized garment segment, three months after the rollout on July 1, would paralyze the synthetic spinning sector leading to thousands of units being closed, said Southern India Mills’ Association.
“More than 80 per cent of garment manufacturing units are in the decentralized sector and undertake job work. These units would become unviable with 18 per cent service tax on the job work when compared to vertically integrated manufacturing units,” said M Senthilkumar, chairman, SIMA.
The sector is the largest employer in the textile value chain creating 100 to 150 jobs per Rs 1 crore of investment. According to SIMA, the industry was hoping that the GST Council would include job work relating to garments and made–ups under the service tax list of five per cent, he added.
The man-made fibre (MMF) yarn spinning sector was also hoping for GST reduction on man -made fibre and its blended spun yarn from 18 to 12 per cent as the sector was opting for optional zero rate cenvat route and paying 12.5 per cent central excise duty all along for MMF, he said.
However, the council’s decision to consider any rate revision only after three months has come as a severe blow for the garmenting, made-ups and synthetic spinning sectors, Senthilkumar added.
The industry is placing its hopes on the final meeting before the official rollout, with Senthilkumar stating that SIMA has urged the Prime Minister and Finance Minister to consider the industry’s demands to reduce GST rates on products during the June 30 meeting of the Council.