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AP textile industry strike affects Surat traders

Jan '12
The State-wide protest by the Andhra Pradesh textile industry over the State government's failure to rollback the five percent Value Added Tax (VAT) on textiles is negatively impacting textile traders in Surat.

Surat textile traders worry that they might suffer heavy losses as the continuation of the strike would lead to reduced demand for finished fabrics in the southern State.

Mr. Devkishan Manghani, President - Federation of Surat Textile Traders Association (FOSTTA), told fibre2fashion, “The textile industry in Andhra Pradesh has gone on strike over the implementation of VAT on its products. They have decided to stay away from business, due to which fabrics from Surat will not go to Andhra Pradesh.”

“The supply of fabrics from Surat to the State of Andhra Pradesh (AP) comprises about 7-8 percent of the total business. The people of AP have a different choice of taste and colour for fabrics, which can only be sold in that region. Now, since these fabrics are not going to AP, the textile industry in Surat has been directly affected in terms of sales,” he explains.

Elucidating further, he says, “Moreover, because of the strike, the payments from AP, which are due or in the pipeline, have been blocked. It is uncertain when the market will re-open. Even after the strike ends, our payments will definitely get delayed as the traders will pay us after they receive their payments from their clients. This time gap in receiving payments may lead to a crisis in the Surat textile industry.”

Talking about the duration of the strike, he says, “The strike began on January 23rd and it is already going on since the last 3 days. There are indications that the strike may prolong for another 10 days.”

Speaking about imposition of VAT on textile products, he opines, “It is not right to levy VAT on textile products because the textile industry is an employment generating industry and the Government gives incentives for it as well. So, keeping the textile industry away from such taxation will be beneficial to both the industry as well as the Government.”

Giving a rough estimate about the likely loss to Surat traders due to the AP textile traders strike, he says, “The impact on the Surat textile industry will be directly proportional to the duration of the agitation. Since AP has 7-8 percent share in Surat's business, it would amount to a loss of about Rs. 70-80 million per day. The longer the strike, the higher will be the loss incurred by the textile industry in Surat.”

Fibre2fashion News Desk - India

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