GST effect: Textile sector in Telangana losing competitive edge

Earlier the sector used to have excise duty exemption but now it that factor is gone, says ALEAP president

Published: 31st August 2017 08:36 AM  |   Last Updated: 31st August 2017 08:36 AM   |  A+A-

Express News Service

HYDERABAD:  To ease the pains caused by Goods and Service Tax (GST) on small scale textile manufacturers, the Telangana state government earlier this month had brought out a textiles and apparel policy. The policy speaks of incentives and land allocation for a mega-textile park, however the sector has responded with mixed reactions. Textile sector exporters have had to keep their selling prices high mainly due to stiff competition from China and Bangladesh and a strong rupee.

Following which export orders that were mostly fulfilled by small scale textile manufacturers started drying up. “Now with GST, garments sector has lost competitive edge. We used to have excise duty exemption but not anymore,” said Ramadevi Kannegati, president, Association of Lady Entrepreneurs of Andhra Pradesh (ALEAP). “In garmenting, corporates used to give small textile traders bulk order mainly due to excise exemption but now that we are under GST that attractive factor is gone. Also tax has to be passed on to consumer making product costlier, now we are not able to compete as small players and big players compete together.

There is a fear that we will lose orders,” she added. With regard to states new textile policy, Kannegati said, “The state will bear cost of providing incentives but for how long? The state is then deprived of revenue. This is not an overall industrial policy, TS is at loss. The policy intervention should be to encourage handloom and it should be a central policy.

But we are grateful the state has come up with this.” “All states are giving incentives but further incentives with good infrastructure is needed. Land allotment for the megatextile park is just on paper,” said A Prakash, president, Telangana State Textile Association. “Instead of textile, the government should focus on technical textile industry where there is a larger scope in India,” he added.

Most rural traders lack GST expertise

According to Prakash, most rural traders lack expertise in GST and are struggling to file returns. “The
technical training provided by the state goverment was just theorybased. Hands-on practical training on
computers need to be given to traders. Many were unprepared to shift to GST as the sector was included in GST much later,” Prakash added.

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