GST to impact apparel prices, traders protest in Telangana

Some 40,000 textile traders in Telangana are protesting against GST as they feel, with GST tax on textile sector will be at four –levels. Manufacturer to all-India wholesaler, all-India wholesaler to state wholesaler, state wholesaler to retailer and finally retailer to consumer. Each of the three stages, will have to make a provision for GST. All this would ultimately fall on the consumer.

The textile sector has a large number of people who may not know how to operate computers or as only 11 per cent shops in the country have computers. Educating traders will be a mammoth task. Meanwhile India’s small, non-integrated manmade fabric manufacturers also feel threatened by GST.

Under GST, manmade fiber yarn will be taxed at 18 per cent while its end product, fabric, will be taxed at five per cent. Tax differential leaves integrated textile firms which produce yarn and use it to make fabric at an advantage over those which buy yarn to make fabric. Also, cotton made yarn and fabric will attract five per cent duty.

This imbalance is expected to hit small textile companies which buy manmade yarn to weave fabric. In addition, since imported fabric will attract 15 per cent effective duty, cheaper Chinese goods may also pose a serious threat.