The cotton ginning industry has called for a one-day strike on December 15 to press for their demand to remove the reverse charge mechanism (RCM) on cotton.
They also threatened to go on an indefinite strike from December 22 if the RCM is not lifted at the next meeting of the GST Council that is slated for December 21.
"We want the RCM removed on cotton and if not done so we will go on a one-day strike on December 15 and thereafter on an indefinite strike from December 22, if the issue of RCM is not resolved in the next GST Council meeting scheduled for December 21," Cotton Association of India (CAI) president Atul S Ganatra said in a statement.
In a notification, government imposed 5 per cent GST on cotton under the RCM, which will be paid by the recipient, thus affecting both ginners and cotton traders. Earlier, government had postponed the implementation of the RCM till March 2018.
According to cotton ginners, this decision has blocked working capital for ginners and this has directly impacted cotton, cotton seeds and cotton oil prices too. Ginners also said if government will not change the rule, ginning industry may lose buying power.
Omprakash Jain president of Karnataka Cotton Association stated that unless RCM on cotton is removed immediately there will be no way left to the ginners but to shutter their operations.
Due to RCM, large amount of funds of ginners are blocked because cotton seed buyers and buyers of cotton bales are not paying GST to the ginners this, the association said.
RCM has been imposed only on cotton and not on other agri-commodities which is totally unjust. If RCM continues on cotton it will entail huge losses. The removal of RCM will indirectly benefit the farmers in realising better prices, Maharashtra Cotton Ginners' Association president BS Rajpal said.
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