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Exporters Jittery as Textile and Fabric Suppliers Go on Strike

Confusion, delayed orders and slow business become issues of concern

Textile traders downed shutters in protest against Goods and Services Tax (GST) for three days from June 27. Traders have geared up for the bandh in response to a pan India bandh call given by the Textile GST Sangharshan Samithi. They are demanding the exemption of textiles/fabrics from the framework of GST, failing which they will go on an indefinite strike, the date of which will be decided later. The traders will also observe June 30 as black day to protest against the government’s move to levy GST on fabrics. The Central government has decided to roll out the GST from June 30 midnight. Traders are of the concern that the GST regime would push them into the cumbersome process of frequent filing of returns. They also claim that they cannot employ clerks to maintain computerised accounts. “Demonetisation has already shown a horrific impact on the textile business. GST would be another bolt from the blue,” says Andhra Pradesh Textile Federation (APTF) president Busireddy Malleswara Reddy. The federation appealed that GST would adversely affect retailers who are small-time vendors. The trade is demanding exemption of textiles/fabrics from GST. In Ahmedabad, the textile trading community has decided to call for a major shutdown of business; around 50,000 textile dealers in the city closed shop for three days in protest against GST. Textile traders are protesting the 5% GST imposed on the cloth business from July 1. Textile traders in Surat have already been observing a bandh for four days and estimates by the association of wholesale cloth traders indicate that around 3 lakh cloth traders across the state will join the three-day bandh. Apart from Surat and Ahmedabad, textile traders in Jetpur, Junagadh, Rajkot, Bhavnagar and Surendranagar are also likely to join the bandh.

Synthetic and Rayon Textile Export Promotion Council (SRTEPC), the apex body of the manmade fabric (MMF) sector, has appealed to textile traders not to resort to a strike and approach the Centre with their legitimate demands to resolve the issues on Goods and Services Tax (GST). About 35,000 textile shops in Telangana were also closed for three days beginning June 27. The Telangana State Federation of Textile Associations (TSFTA) has given a bandh call, joining the national-wide protest announced by the national body of such associations across the country. Traders in the State will take out a rally on June 30 protesting against imposition of GST on textiles. “The textile trade is quite different from some other businesses. Payments come in very late, say six months after dealers or stockists supply it to the retailers. But we are expected to pay the tax immediately. This will result in tremendous amount of pressure on the trader for working capital,” said one of the traders. Telangana State Federation of Textile Associations president Ammanabolu Prakash said, “From 1947, the sector has been exempted. Now with this, the textile sector will become the only one where tax will become four-layered. Manufacturer to all-India wholesaler, all-India wholesaler to State wholesaler, State wholesaler to retailer and finally the retailer to the consumer.” This way, he said at each of the three stages, the manufacturer, all-India wholesaler and retailer will have to make a provision for GST and also keep their share of profits. The federation leaders said all talk of the concerned Government departments taking up awareness camps across all sections of trade and industry apart, the textile sector had the largest number of illiterate people who knew nothing about either computerisation or GST. The federation has 152 associations as its members in Telangana.

Even in Delhi, major readymade garment wholesale markets like Tank Road, Gandhinagar have been closed. Exporters who have orders in hand are facing a tough time as fabric supplies have been severely hit and are considering the phase to be even worse than demonetisation. Those in the organised sector have, for this reason, decided not to support cloth merchants in this protest; they would be able to claim input credit. “We want GST to be implemented and, hence, do not support the protest as called for 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 all issues for smooth GST payment.

The market condition is really tough as most of the fabric suppliers are on strike. It is impossible to predict when the situation will stabilise. We are registered under GST so we are not facing problems, but with limited stock availability and chaos in the market over GST, things are really turbulent.

Vipul Gandhi (Kalpana Trading Co.)

From fabric to finish to final product all things will get expensive, no one has clear information about GST and its outcome. Presently we are discussing with our company C.A. and friends about the GST and how should we prepare for the same. The market situation is very bad, even worse than what it was during demonetisation.

Purnima Vatani (Vatani & Sons)

The GST is directly affecting readymade garment business and this will lead to increase in cost. There are lots of rumours in the market and nobody is clear about GST. People don’t know in which slab rate they will fall, there is lot of confusion among the traders and no newspaper or media is able to give the exact position.

Jay Shah (Abhishek Fashion)

If fabric becomes costly then everything will become expensive. There are no seminars or forums to discuss the GST and we are still clueless as what will happen.

Shailesh Patel (Pyramid Fabrics Private Limited)

As far as the increase in expenses is concerned we cannot say much about it, but this will definitely affect export orders as we will not be able to ship on time. The nationwide ongoing strikes will create more chaos.

Deepak Pawar (N. K. Dresses)