The GST Council’s decision of considering any rate revision only after three months has come as a severe blow for the garmenting, made-ups and synthetic spinning sectors, The Southern India Mills’ Association (SIMA) has said. The decision would paralyse the decentralized garment/madeup segments that predominantly function with the jobwork, it added.

“Garment/madeup sector, the largest employment provider in the entire textile value chain creating 100 to 150 jobs per crore of investment, was hoping that the GST Council would include jobwork relating to garmenting/madeups under the service tax list of 5 per cent GST rate in its 17th meeting,” SIMA chairman M Senthilkumar said in a press release.

“The MMF yarn spinning sector also was hoping for reduction of GST on man-made fibre and its blended spun yarn from 18 per cent to 12 per cent as the spinning sector was opting for optional zero rate Cenvat route and paying 12.5 per cent Central Excise duty all along for MMF,” he added.

More than 80 per cent of the garment/madeups manufacturing units are in the decentralised sector and undertake jobwork. Senthilkumar said that these units would become unviable with 18 per cent service tax on the jobwork when compared to vertically integrated manufacturing units.

He added that the decision of considering GST revision after three months would paralyse the decentralised garment/madeup segments that predominantly function with the jobwork and the synthetic spinning sector making several thousands of units would be closed throwing several lakhs of people out of jobs.

He stated that the industry is very much willing to extend its fullest cooperation to the government for the successful implementation of GST and ensure revenue gain on the whole. He appealed to the prime minister and Union finance minister to consider including garment and madeup segments related jobworks under 5 per cent list of service tax that are currently being exempted from service tax and also reduce the GST rate on man-made fibre and its blended yarn from 18 per cent to 12 per cent at the next GST Council meeting scheduled on June 30, 2017. (RKS)

Fibre2Fashion News Desk – India

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