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

Pic: Shutterstock

Textiles | On 25th Sep 2021

EU extends GSP plus status for Pakistan with 6 new conventions

The European Union (EU) has extended its general system of...

Pic: Shutterstock

Apparel/Garments | On 25th Sep 2021

Bangladesh seeks Russian support for ensuring direct exports there

Bangladesh commerce minister Tipu Munshi recently sought Russian...

Pic: Boris-B / Shutterstock.com

Retail | On 25th Sep 2021

US’ Halloween spending to reach $10.14 bn this year: NRF

Consumer spending in the US on Halloween-related items is expected to ...

Interviews View All

Vandana Narang, National Institute of Fashion Technology

Vandana Narang
National Institute of Fashion Technology

Campus placements are low due to lockdowns

Textile Industry, Head honchos

Textile Industry
Head honchos

Led by MMF, Indian apparel exports likely to double in next 3 years

Textile Industry, Head honchos

Textile Industry
Head honchos

Fabric selection & recommendation based on client's brief

Kishina Daruka and Mishika Daruka,

Kishina Daruka and Mishika Daruka

Headquartered in Kolkata, India, sustainable clothing brand Ora was...

Gus Bartholomew,

Gus Bartholomew

<b>Gus Bartholomew</b>, co-founder of SupplyCompass, explains to <b>Subir...

C Maennich,

C Maennich

Trützschler, one of the world's leading textile machinery manufacturers,...

Hemant Bheda, Arevo

Hemant Bheda
Arevo

Arevo, based in Silicon Valley in California, develops technology to...

Jacques Prigneaux, EDANA

Jacques Prigneaux
EDANA

EDANA has been the leading global association and voice of the nonwovens...

Suresh Patel, Non Woven Federation of India

Suresh Patel
Non Woven Federation of India

The Non Woven Federation of India (NWFI), representing the regional...

Vidur Adlakha & Riccardo Bennidini, La Fuori

Vidur Adlakha & Riccardo Bennidini
La Fuori

With an active presence in US, Italy and India, clothing brand La Fuori...

Sandeep Gonsalves & Sarah Gonsalves, Sarah & Sandeep

Sandeep Gonsalves & Sarah Gonsalves
Sarah & Sandeep

Established in 2012, Sarah &amp; Sandeep is a luxury menswear label...

Anjali Bhaskar, Samatvam

Anjali Bhaskar
Samatvam

<b>Anjali Bhaskar</b> has an experience of 12 years in the fashion...

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


September 2021

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


Advanced Search