Home / Knowledge / News / Textiles / Impact of GST on textile industry
Impact of GST on textile industry
19
Feb '10
High on the agenda of the central government is bringing in much needed tax-reforms which will provide the much needed competitiveness to the industrial sector, in particular. The government is mulling a central Goods and Services tax (GST) to replace the plethora of taxes.

How will the new tax system be effectively applied in the textile sector, is the moot question. The unorganized or decentralized textile sector in India accounts for 76 percent of production in the industry, which is very huge by any account. Add to that the hundreds of thousands of textile traders spread across the country.

There are estimated to be around 2.2 million powerlooms and same number of knitting machines in the country mainly in the unorganized sector. Each typical factory has about 8-12 powerlooms or knitting machines, which means 250,000 powerloom units and an equal number of knitting plants.

To bring these gigantic number of units made up of production units and traders in to making them tax-compliant is a mammoth task. Incase that it is not successful; it could prove to be detrimental to the organized sector which has invested huge amounts of money, and could bring additional flows to a halt.

It may be recalled that the textile industry which was flourishing till the 1980's was brought to its knees by the unorganized sector, which due to the nature of small compositions of the units, did not come under the ambit of labour laws like Provident Fund and Employee State Insurance schemes meant for the benefit of the employees and also evade taxes.

This brought about an un-level playing field level, due to which hundreds of composite mills closed down in the hundreds in the 1980's as most of the unorganized sector was concentrated in the powerloom and fabric finishing sector who by their very nature of being small in size could get away without being tax compliant.

The other big challenge is the long-value chain of the textile industry, of which 90 percent is in the unorganized sector. This could prove to be the biggest challenge as most of the small weaving units may have a turnover below the threshold limit and there is a serious possibility of the VAT chain being broken.

Fibre2fashion News Desk - India


Must ReadView All

Courtesy: American & Efird

Textiles | On 20th May 2018

A&E introduces Repel

American & Efird (A&E), a global leader in industrial sewing thread...

Archroma working with House of Denim Foundation

Textiles | On 20th May 2018

Archroma working with House of Denim Foundation

Archroma, a leader in colour and specialty chemicals, has joined...

Courtesy: Amazon

Textiles | On 20th May 2018

Amazon opening first fulfillment centre in Tucson

Amazon.com is opening its first fulfillment centre in Tucson, which...

Interviews View All

Smith Vaghasia
Sanado India

Online remains the best destination for shopping

Sachin Sharma
Gem Enviro Management Pvt Ltd

There are no significant differences between virgin yarn and PET recycled...

Cindy McNaull
Cordura

We have broad range of options in durable fabrics

Anupam Arya

<div>Jaipur-based Fabriclore Retailing Pvt. Ltd. is attempting to revive...

Nitesh Mittal

Kusumgar Corporates is a leading manufacturer of technical textiles and...

Sugandha Bhardwaj

<div>New Delhi-based Brinjal Designs Pvt Ltd manufactures home furnishing...

Marten Alkhagen
Swerea IVF AB

Marten Alkhagen, Senior Scientist - Nonwoven and Technical Textiles of...

Eamonn Tighe
Nature Works LLC

Eamonn Tighe, Fibres and Nonwovens - Business Development Manager of...

Iago Castro Asensio
RCfil Distribuciones S.L.

Iago Castro Asensio, International Business Manager of RCfil...

Karan Arora
Karan Arora

Bridal couture created with rich Indian heritage, exquisite craftsmanship...

Jay Ramrakhiani
Occasions Elegance Wear

It is believed that by early 19th century, Varanasi weavers had moved away ...

Silvia Venturini Fendi
Fendi s.r.l

"Yes, my confidence and positive attitude are my strengths and should be...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

Leave your Comments


May 2018

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Advanced Search