GST impact: Surat textile traders may go on strike again

Despite GST cut in job work, industry says it's of limited help

The Rs 50,000-crore Surat-based textile industry says it is unimpressed at, the recent  goods and services tax (GST) cut on third-party services, popularly known as job work.

The city’s textile traders plan to have a meeting on Tuesday with national counterparts on the course of action, including a possible renewal of their earlier strike.

The 75,000-odd textile traders had resumed business on July 19 after the government had assured revision of rates in the August 5 GST Council meeting. Their strike had begun on June 16, with an estimated loss of Rs 5,000 crore and rendering many jobless.

The GST Council had on Saturday decided on a cut in rates on job work, from 18 per cent to five per cent. However, this has mainly brought cheer to only the garment industry. 

“This move largely benefits the apparel sector and the Surat textile market is predominantly synthetic and fabric-based,” said Tarachand Kasat, president of the GST Sangharsh Samiti. The body is spearheading a demand to repeal the five per cent GST on fabrics.

“We were expecting steps to ease filing of returns, removal of the five per cent tax and address the issue of accumulated duty which is not eligible for refund. We will now meet on Tuesday and might go on strike again,” added Kasat.

The trade is also demanding an 18-month GST vacation, with implementation only from April 2019. The central government has refused.

The city’s textile industry employs at least 1.5 million people, spread in spinning, weaving, dyeing and processing, trading and garmenting, through 20,000 manufacturers, including power looms, 75,000 traders and 150 wholesale textile markets. Of this, garmenting forms a small portion. The bulk is in spinning, weaving, dyeing & processing, as well as trading of fabrics, sarees and dress materials, transported to other parts of the country.

Earlier, the GST on garmenting job work was fixed at 18 per cent; that on other processes such as sizing, twisting and weaving attract five per cent. With the recent announcement, job work across the value chain will attract five per cent GST each.

The power loom industry in Surat says the government’s announcement is “meaningless”, as the change wouldn’t affect it. Issues over multiple tax filing and non-refundable accumulated duty credit persists for the weaving industry here which houses 650,000 such power looms, earlier generating Rs 1,500 crore in monthly revenue. Of this, an estimated 60 per cent have been shut since a month, a loss of Rs 900 crore so far. 

According to Ashish Gujarati, president of the Pandesara Weavers’ Association, which alone has 200,000 power looms, the only difference has been a slight reduction in accumulated input tax credit from Rs 1.25 a metre to 80p a metre, under a five per cent GST on twisting job work.