Wholesale cloth merchants say they’re going on a three-day nationwide strike from Tuesday, in protest at the five per cent Goods and Services Tax (GST) rate levied on job work given by them to the textile industry.
Others in the segments, such as traders, transporters and courier companies exclusively working on cloth delivery are expected to join the protest.
The demand is for exemption from GST for a year and training about tax levies and helpdesk numbers with adequate guidance.
“None other than yarn manufacturers had been paying taxes so far in the history of the textile industry in India. Most important, the downstream textile value chain works on a long period credit basis, on mutual trust and consent, which they have maintained for several decades without government intervention. These businesses get out-of-the-books finance from within the industry, which is discouraged by banks. Therefore, being an integral part of the textile industry, wholesalers, traders, angadiyas, transporters, courier companies, etc, need to be protected with at least a year of GST exemptions,” said Gaurang Ramprasad Bhagat, president, Maskati Cloth Market Association, an Ahmedabad-based body which says it represents cloth merchants across the country.
Bhagat added the strike would have a cascading but gradual impact on the entire textile industry, as merchants play a pivotal role in transportation of cotton for yarn, fabric and clothes.
One complaint is that a majority of those in the textile value chain lack facilities to track movement of goods and, hence, be able to claim input credit.
Those in the organised sector have, for this reason, decided not to support cloth merchants in this; they would be able to claim input credit. “We want GST to be implemented and, hence, we don’t support the protest as called on by the cloth merchants, “ said Rahul Mehta, president, Clothing Manufacturers Association of India (CMAI).
CMAI says it has developed software in association with Tata Consultancy Services to help clothing manufacturers and merchants identity lacunae and address the issues for smooth GST payment.