Bengaluru: CM urged not to hike tax slabs for textile, garment products

Bengaluru: The delegation of Federation of Textile and Garment Association (FOTAGA) under the leadership of Karnataka Hosiery and Garment Association (KHAGA) met Chief Minister Basavaraj Bommai at his office at Vidhan Soudha on Thursday, and handed over the copy of the memorandum on change of tax slabs from 5 percent to 12 percent for the textile and garment industry.

In the memorandum, KHAGA said, "The Karnataka Hosiery and Garment Association expresses its disappointment at the recent notification amending the GST rates on apparel. KHAGA has been earnestly representing to the government and GST Council not to implement this change. The changes effected will increase the prices of all fabrics and garments priced below Rs 1,000 from 5 percent to 12 percent. In fact, with the proposed merger of the 12 percent and 18 percent slabs to a single 15 percent or 16 percent rate, it will result in a whopping increase of 300 percent in the GST rate for garments which are used by the weaker sections of society.

This is especially shocking when one considers that more than 80% of India's total garment market is below the Rs. 1, 000 price level. The textile industry has traditionally had a significant portion operating in the informal sector, and KHAGA has worked very hard over the last several years to get more and more players into the formal economy. This was greatly assisted by the reasonable rates under the current GST Structure.

We fear that this massive increase in GST rates may persuade many players to switch to the informal sector once again". What will make the impact of this cost increase even more drastic, is the fact that the industry is reeling under a totally unprecedented price increase of its raw materials, especially yarn, packing material, and freight. The market is likely to see a 15% to 20% price increase in Garments in the coming season even without the GST Rate increase. KHAGA believes this measure is completely misplaced, as it is reportedly introduced primarily to address the Inverted Duty Structure existing in a section of the industry—and this sector is not more than 15% of the total Industry. To resolve a problem which exists in 15% of the industry therefore, this move will adversely impact 85% of the total Industry.

KHAGA will continue its efforts to persuade the Government and GST Council not to go ahead with this change of rate, and hopes that the Government will recognize the disastrous impact on the industry, market, and employment if this change were to be implemented.

Speaking to Hans India, former president Sajjan Raj Mehta said that South India Garment Association President Anurag Singhla, Khaga Vice President and Chamber of Commerce Director Pahadsingh Rajpurohit, Former Khaga President Dilip Jain, Sajjan Raj Mehta and SIGA Minister Rajesh Chawat had detailed discussions on the memorandum. As CM Bommai will be taking part in GST Council meet to be held in Delhi.

He said, "Apprised of the ongoing tension in the garment industry. We informed them that the memorandums have been sent to the Prime Minister, Finance Minister, Textiles Minister, Finance Secretary, GST Commissioner and Finance Ministry and efforts are on at all India level also."

Meanwhile, CM Bommai informed us that at least 20 memorandums from across the state have been received so far by the organizations related to cloth. "We advocated 5 percent GST on garments and clothes. Also, Bommai was representing Karnataka in the GST Council even during Yediyurappa's time and has been performing the duties of Chief Minister and Finance Minister of the recently constituted panel. CM Bommai listened to our side seriously," said Sajjan Raj Mehta.

On Thursday, representatives of 8 organizations of the Federation of Textile and Garment Associations related to textiles in one voice demanded relief.