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Textile sector decries Centre's 'Inverted Duty Structure' on fabrics

The insiders in the industry said that the stated objective of such a change is the anomaly of an Inverted Duty Structure faced by a small section of the industry

Thursday October 28, 2021 8:23 PM, IANS

Inverted Duty Structure

Kolkata: Hosiery, knitwear, fabric, textile traders and garment manufacturers bodies in West Bengal have expressed concern over the Centre's proposed plan to increase GST basic rate of 5 per cent to 12 per cent on Fabrics and Garments below Rs 1,000 in the pretext of 'Inverted Duty Structure' from January 1, 2022.

The insiders in the industry said that the stated objective of such a change is the anomaly of an Inverted Duty Structure faced by a small section of the industry.

"It is indeed disturbing, that merely to correct an anomaly faced by one segment of the industry, which constitutes not more than 15 per cent of the total Industry, the Government is proposing to implement Inverted Duty Structure which will affect nearly 80 per cent of the final products to the Consumers (Garments over Rs 1,000/- were in any case at 12 per cent GST)", they said.

"The Hosiery & Knitwear including Garments Industry in India employs close to 11 million workers, of which 8 million are engaged in the Domestic sector and 4 million in the Export sector. It is estimated that almost an equivalent number of people are indirectly employed by the industry - in Embroidery units, Washing Laundries, Packaging industry," President of Federation of Hosiery Manufacturers Association of India (FOHMA), B.K. Agarwala said.

"Even if there is an estimated 18 per cent shrinkage in the workforce, the industry is likely to see a job loss of 1.44 million. An increase of taxes by as much as 7 per cent will lead to a much higher level of job losses - possibly in excess of 2 million," Agarwala, who doubles up as the Managing Director of Rupa & Company added.


"As a result of the massive price increase of Raw Materials such as yarn, fabric, fuel, packaging materials, transportation, etc, the industry is already seeing a 15-20 per cent price increase in the final price of the product", President of West Bengal Hosiery Association (WBHA) Ashok Todi said.

"The Consumer is already reeling with job losses, wage cuts and social and personal traumas. Adding another increment to the prices will lead to a very severe drop in consumption, or a shift to cheaper and lower quality goods," he added.

"The combined goal of any Government and Industry would be to improve the quality of consumption in Society -- Increasing prices beyond the reach of the common man goes against this basic principle", Todi, who is also the chairman of Lux Industries Limited added.

"Indian Hosiery Knitwear Fabric, Textile Traders & Garment Industry is still largely a cotton based Industry. Cotton garments, including traditional wear categories such as Dhotis, Sarees, etc form the bulk of clothing used by the poorer sections of the society", President of The Bengal Hosiery Manufacturers' Association (BHMA), Sharad Bhatter said.

"This section is already struggling to come out of the severe economic, social and personal trauma caused by the pandemic. Any additional burden on this section of the population will result in consumer negativity which will not be beneficial to anybody", he said.

"In any country where there are differential rates of GST, essential commodities, especially those consumed by the poorer section of society, would be levied at the lowest slab. We will be removing an essential commodity item from the lowest slab to a higher slab - which would be unprecedented", President of Chamber of Textile Trade & Industry (COTTI), Arun Bhuwalka, said.


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