GST hits carpet industry, 5,000 units may shut down: CEPC

21 Jul '17

2 min read

The handmade carpet industry has been affected badly following the implementation of 18 per cent Goods and Services Tax (GST) on job works and 12 per cent on their sale or purchase. Almost 5,000 units associated with the carpet industry are on the verge of shut down or likely to become non-functional, said Carpet Export Promotion Council (CEPC).

Closing down of these units will lead to rise in unemployment. Around 20 lakh workers associated with the carpet industry will lose their livelihood. It will also affect the exports of carpets and floor coverings costing around Rs 1,000 crore. Majority of workers are from Uttar Pradesh, Rajasthan, Haryana and Jammu and Kashmir.

"No new orders are being executed and weaving has almost come to a complete closure for new orders. The old orders and old stock is also not moving out of fear of imposition of tax, not getting increased price from buyers due to old contracts and worry on losing money," said CEPC in a statement. It is claimed that export orders worth Rs 2,000 crore have been cancelled as importers have refused to pay incremental cost.

The demand for Indian handmade carpets is huge in international market. With GST, it has become difficult for them to compete in the global market, CEPC stated. Countries like China and Turkey will gain with the declining exports of Indian handmade carpets. (RR)

Fibre2Fashion News Desk – India

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