NEW DELHI: Textile industry body CITI today urged the government to reduce GST rate on manmade fibre and yarn to 12 per cent from 18 per cent, saying 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 (CITI) Chairman J Thulasidharan requested Finance Minister Arun Jaitley, Textile Minister Smriti Irani, Textile Secretary Anant Kumar Singh and Revenue Secretary Hasmukh Adhia to reduce the manmade fibre (MMF)/synthetic fibre and yarn GST rates from 18 per cent to 12 per cent.
Indian synthetic sector growth rate is stagnated due to factors like high price, higher cost of manufacturing on account of high input prices and competition from China, South Korea, Indonesia and Thailand.
Thulasidharan explained that mill gate prices of MMF/ synthetic fibre and yarn are higher in India compared to competitors like China, Indonesia and South Korea.
He further added that these countries have lowest tax and high export incentives to produce and supply 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 from 1 July onwards as GST rate on MMF is highest among the major textile producing and supplying countries of the world.
The significance of the unorganised sector is reflected from the fact that only 4 per cent fabric is produced in composite mill segment.
"Disadvantage to MMF fibre & yarn based textile goods 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 offers MMF textile goods at low and cheap prices," the CITI Chairman said.
Thulasidharan stressed upon to rationalise the GST rates on a war footing basis as this will dent India's competitiveness in MMF sector.