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Stocks of textile companies rose on Thursday, following a proposal by the Ministry of Textiles to keep the sector on the lowest range of the proposed goods and services tax (GST). While shares of Indo Count Industries jumped 11 per cent to Rs 25.40 apiece, those of Mafatlal Industries rose 6.42 per cent to Rs 253.80 apiece. Almost all companies in the sector, be it in the raw materials or finished products segments, saw saw their stocks rise.
Earlier, Union Textiles Minister Sangosh Gangwar had said, “We are trying to convince the finance minister so that GST for the textile sector remains at the lowest level.”
It is, however, unclear whether the textiles ministry has sent the proposal to its finance counterpart.
The GST regulation proposes a duty of 12-18 per cent. Depending upon various parameters, the applicable GST rate would differ from one sector to another.
“India has a share of five per cent in global textile exports, with an annual shipment of $40 billion. With increased focus on ‘Make in India’, we want to double our market share in the next five years,” the minister said.
The sector has welcomed the textile ministry's proposal. “GST is a complex issue for the textile sector due to a number of state and central levies applicable on various products. So, even if GST is made applicable, it will take some time for the sector to settle,” said R K Dalmia, chairman of the Cotton Textiles Export Promotion Council and president of Century Textiles.
"So, bringing all these players under GST would be herculean task. Being the textile sector the second highest employment generator, any burden on this sector would result into losing our competitiveness to other markets, largely China. Therefore, the government must keep textile sector on the lowest possible tax slab," said Dalmia.
