The newly appointed President of The Southern India Mills’ Association (SIMA), P Nataraj who is also the Managing Director, KPR Group, addressed the press and media today.
Addressing the press, Natraj President of SIMA highly appreciated the bold and proactive initiatives taken by the Prime Minister, Narendra Modi and Union Textile Minister, Smriti Zubin Irani.
"Demonetisation and GST (one tax-one nation) were the two revolutionary policies implemented by the NDA Government to create a healthy business environment, curb evasion and corruption, ensure compliance, enhance global cost competitiveness, improve growth rate, facilitate ease of doing business and many other beneficials" he said.
While thanking and appreciating the strenuous efforts taken-up by Union Textile Minister to classify the entire cotton textile value chain and also all the textile job work under the lowest and seamless GST slab of 5%, he said that the lowest rate had protected the livelihoods of over 40 million people involved in cotton farming and trading community.
Mr Nataraj stated that the demand for yarn in all the major markets especially Bhiwandi, Ichalkaranji and Kolkata have picked up due to Diwali demand for fabric and hoped that the market might become normal within a fortnight.
SIMA Chairman pointed out that the global cotton position would be very comfortable during the year 2017-18 due to an increase in area under cotton cultivation by around 11% and India is likely to get a record crop with 15% increase in area and favourable monsoon and weather.
He stated that the cotton price would also be comparatively lower throughout the cotton season and therefore, the domestic demand would pick up. He however cautioned that there were few major problems and ill-effects due to certain GST anomalies that need to be addressed on a war footing to bring all the stakeholders of the textile industry under GST net.
"Indian textiles and clothing industry had been passing through continuous recession during the last three years mainly due to poor off-take in the global market, the FTA/PTA competitive advantage gained by the competing nations like Vietnam, Bangladesh, high tariff rates imposed on Indian textiles and clothing products in the major textile makers such as EU, US, Canada, China, etc. The total textiles and clothing exports had stagnated at around US$ 40 billion during the last three years" he said.
He stated that for processed cotton fabrics, the accumulation of input tax credit would range between 3 to 5% of the sale value, dyes and chemicals account over 30% percent of the processing charge that attract 18% GST while the fabric or job work is levied with 5% GST.
Yet another genuine demand of the synthetic sector is the reduction of GST rate on MMF spun yarn including sewing thread filament yarns from 18% to 12%.The power loom sector and independent weaving units that produce over 95% of the woven fabric is burdened with 18% GST on yarn while the vertically integrated units do not have such a problem as they need to pay 18% GST for fibres and only 5% GST on fabrics and the cost difference works out to 5 to 7%.
Mr Nataraj appealed to the GST Council to sort out both the anomalies of refunding the accumulated ITC at any stage of manufacturing especially processed fabrics and also reduce the GST on MMF spun yarn including filament sewing threads from 18% to 12%.
SIMA Chairman stated the Government had not yet given the mandate to the Duty Drawback Committee to recommend the revised duty drawback rates and ROSL. The Government had extended the benefits only upto 30th September 2017.
As there is uncertainty in the rates of benefits, the export booking is getting delayed. Mr Nataraj appealed to the Centre to extend all the export benefits till the business revives and revise the rates to ensure the pre-GST export competitiveness of the industry is sustained. He also appealed the Centre to expedite clearing all the pending export benefits that cause severe financial stress to the exporters.
Mr Nataraj stated that there were several teething problems in the GSTN causing hardships for filing the returns and day to day operations. There is undue delay in getting several clarifications including the use of C forms for inter-state purchase of HSD oil under 2% CST that has been kept out of GST, issues relating to canteen and transport services provided by the manufacturing units to their employees through contractors or at concessional rate, etc.
"The local tax authorities should be facilitated to clarify the issues then and there and also to overcome the teething problems. At presently, they are only forwarding the issues to the concerned GST Council Committees and unable to provide instant solutions" Mr. Natraj said.