Textile sector finds little succour in ministry sops

Textile sector has been demanding that the rates and rules be eased since GST roll-out

The textile industry, especially the power loom segment, has hardly been comforted by a ministry clarification that only job workers or units with an annual turnover of Rs 20 lakh or more would need to register for the good and services tax (GST).

Since the new indirect tax regime was rolled out on July 1, the textile sector has been demanding that the rates and rules be eased for it. In its latest notification, the textile ministry has not only eased the norms for job workers but has also warned of action against master weavers who insist small job units must themselves register for the GST.

The development comes after the ministry received various notices and representations from job workers. J L Balakumar, deputy director and officer in charge at the Ministry of Textiles, said GST registration was not required for small job workers and job working units since there was a threshold exemption limit of Rs 20 lakh under the GST.

The sector, however, is not happy with the notification. According to power loom and job workers, when the industry was demanding an 18-month vacation from the GST, this relief would provide little succour.

“There are a large number of small job workers with an annual turnover of less than Rs 20 lakh, whom the power loom industry, especially master weavers, has to engage. With the exemption from GST registration, master weavers would end up with the reserve charge mechanism,” said Ashish Gujarati, president of Pandesara Weavers’ Association, in Surat.

In other words, master weavers would have to pay duty on behalf of job workers. Gujarati said decentralised units employ job workers’ services for weaving and embroidery work, which attracts GST at 18 per cent.

The power loom sector was also padding up for a double whammy. Much of the yarn twisting and embroidery work was done by women from their homes, but labour, which along with power accounted for 80 per cent of input, is not under the input credit net in the GST regime. This would deprive the power loom owners from a government refund.

“The government should have allowed time for the power loom sector to first come under the formal taxation net before levying any duty on it,” Gujarati said.

Job workers, too, feel the future is bleak.

Mehul Patel, who runs a unit with 100 looms in the Pandesara GIDC, said the textile ministry’s notification would result in dwindling orders. “This might further discourage master weavers from issuing orders,” he said.

However, P Kumaraswamy, secretary, Coimbatore District Job Working Power Loom Unit Owners’ Association, said the notification was a great relief. He said there were about 600,000 power loom units in Tamil Nadu; 80 per cent of these have annual turnovers of about Rs 10-12 lakh.

Kumaraswamy added that master weavers were not giving any new job work orders, as most of them were unable to dispose off their huge stock which did not have proper bills. “We hope that everything will come back to normal in the next two months. The GST will help to streamline the system in the long run,” he said.