Amit Mitra urges PM to call GST meet to reverse tax hike on textiles

Former West Bengal finance minister and now advisor to the state Chief Minister, Amit Mitra on Sunday urged Prime Minister Narendra Modi to convene an urgent meeting of the GST Council to revert a hike in tax on man-made fibre textiles.

In a tweet Mitra said, "Modi Govt will commit another blunder on Jan 1. By raising GST on (man-made) Textiles (from) 5 per cent to 12 per cent, 15 million jobs will be lost and 1 lakh units will close. Modi ji, call a GST Council meeting now and reverse decision before sword of Damocles falls falls on the head of millions of people."

The union government had notified an increase in GST on natural fibre products from 5 per cent to 12 per cent, including apparels in the lower tax bracket with effect from January 1, 2022.

The former finance minister on December 24 at a media meet had urged the Union Finance Minister Nirmala Sitharaman to similarly convene an urgent meeting of the GST Council to rescind the seven per cent tax hike in GST on the textiles sector to prevent job loss and closure of small units.

"If the tax (hike) is not reversed then the impact will be huge with job loss to 15 lakh (1.5 million) people, including those engaged in ancillary industry and closure of one lakh small units. A lot of units will revert to the informal sector, Mitra had told reporters during the meet.

However in his tweet put out on Sunday the job loss figure was placed at 15 million. The total number of jobs in India's textile sector is placed at 45 million by the India Brand Equity Foundation a trust founded by the Ministry of Commerce and Industry.

Mitra had pointed out that the textile trade's natural fibre segment constitutes 80 per cent of the Rs 5.4 lakh crore sector and its net profit margin is between one and three per cent making it vulnerable to any kind of cost increase.

The cotton sector is already reeling under 70 per cent inflation, he had claimed, adding that the government estimate of earning an additional Rs 7,000 crore from raising the tax is mythical as a lot of units may shut down as a direct consequence of the tax hike.

He had accused the Centre of not discussing the issue in the GST council before announcing the hike.