Will reply via votes: Surat's textile sector to FM

On Tuesday, Jaitley ruled out zero GST rates on fabrics. It is currently 5%

Even as the Rs 50,000-crore textile industry in the diamond city of Surat limps back to life after a month-long stir against the goods and services tax (GST), Union Finance Minister Arun Jaitley’s comments have not gone down well with traders and weavers alike.

Claiming that the central government, through the Ministry of Finance, has done a volte-face, textile traders and weavers maintained the government would have to adhere to their demands, else they would “reply through votes” if things don’t turn around at the GST Council meeting on August 5.

“If the government has the right to tax, we have the right to vote. If our demands are not met, we will see inspector raj returning to the textile industry,” said Gurumukh Kungwani, president of Millennium Market Traders Association, one of the leading textile traders’ body in Surat.

On Tuesday, Jaitley had ruled out zero GST rates on fabrics, which currently attract five per cent, citing the move would break the input tax credit chain for the domestic industry. “It is not correct to say the textiles sector was never taxed in independent India. In fact, during 2003-04, the textiles sector was subject to central excise duty,” Jaitley had said, in a written reply to a question in the Rajya Sabha.

From politicisation of their predicament to discrimination, traders and weavers have cited multiple reasons for Jaitley’s comments.

“It is disheartening to see the finance minister doing a volte-face despite assuring us positive support.  This seems to be a political ploy. We will not budge and, if forced, we may go on strike again. However, we will wait until the August 5 (GST Council) meeting,” said Tarachand Kasat, president of the GST Sangharsh Samiti, which is spearheading Surat’s textiles traders’ demand of repealing the five per cent GST on fabrics.

“We don’t mind an additional rate at the fibre or yarn levels. But taxation at multiple levels of processing, dyeing, fabric as well as trading, will kill the smaller players in the industry,” said Kungwani.

There are different processors doing different processes and hence, compliance and accounting become onerous.

Through the GST Sangharsh Samiti, which was initiated by Hitesh Sanklecha, a textile trader, the community has demanded removal of five per cent tariff on trading, which the government insists will remain. The traders are also demanding an 18-month vacation, with the deferment of GST implementation to April 2019.  However, so far, the government, which had several meetings with the textile industry at varied levels, is implacable.

On a wait-and-watch mode till August 5, only 3,000 of the overall 75,000-odd textile traders are yet to register on the GST Network in the hope of a positive outcome.  The ‘indefinite’ strike, which began on June 16 ended on July 18, incurring a loss of Rs 5,000 crore in the interim and rendering countless jobless.

Terming Jaitley’s comments as “discriminatory”, Ashish Gujarati, president of Pandesara Weavers’ Association, said the government was worried only about big industrialists to the detriment of the smaller players.  

“The finance minister should take stock of the ground situation. The Centre should take a holistic look at the value chain of the textile industry, including spinners, weavers, traders and composite mills, and come up with a plausible solution,” said Gujarati.