In many ways this is a short story about some goods, some services and some taxes that eventually turned out to be quite a lot. This disconcerting story is about the textiles hub of Surat, one of the largest and most happening in the country-one that has been at the centre of attention since widespread protests over the goods and services tax (GST) erupted there in the middle of June. Business, across the field, has been hit, and the current d'tente can be described as tenuous at best. Subir Ghosh takes stock of the situation.
An uneasy calm prevails over the usually-bustling textiles hub of Surat. The phrase "uneasy calm" of course could well be a worn-out clich; but both the unease and the calm here are stark and for real. The calm exists because the strike and simultaneous protests have been called off in the hope that the Goods and Services Tax Council will look into the grievances of the city's traders, as well as their cousins elsewhere. The unease, on the other hand, self-perpetuates because the core issues that had triggered off the spontaneous demonstrations have not been wished away. And the hustle-and-bustle of just the other day has very unnervingly petered down into an abject disquiet. Yet, one would not have expected it to be so, considering the immediate reason for this: the goods and services tax (GST), that came into effect from July 1 this year. When this magazine had devoted virtually an entire edition to the city's textiles industry in 2016, there in fact had been a palpable excitement in the hub over just the prospects of a GST, which at that time was caught in a political limbo. All and sundry had been looking forward to the GST which, they believed, would simplify the ease of doing business. But after the second rounds of GST rates were announced, which mostly related to the textiles and apparel industry, a cloud of uncertainty initially hovered over the issue. This cloud of uncertainty soon turned into an outpouring of misgivings against the new tax regime.
It is not that traders and others have been fundamentally against the idea of GST per se; the outrage is more about the nitty-gritties surrounding compliance issues (particularly with those who are not so tech-savvy) as well as what many have described as anomalies in the GST rate slabs and the overall structure that do not do justice to the flow in the long winding chain of the industry.
But right now, everyone is dealing with the losses that accrued either because of no business during the protests, or because of the bottlenecks that got introduced following the rolling out of the GST.
Manoj Agarwal, president of the Federation of Surat Textile Traders Association (FOSTTA), summarises the state of the local industry, "Only 40 per cent of the textiles business in Surat has set back on track. It was closed during the protests, and even now a large number of traders are slowly reopening their businesses. During the protests, the Surat textiles industry incurred a loss of ₹10,000 core." The FOSTTA is an association of clothing traders comprising 180 registered textile markets, including 65,000 members of Surat. In other words, Agarwal's estimates cover a substantial spread.