The Kerala Merchants Chamber of Commerce has urged the Union Finance Minister to reconsider the decision to enhance the GST rates from five to 12 per cent for textiles and footwear considering the genuine grievances of the dealers in the sector.

G Karthikeyan, President of the Merchants Chamber said that there are more than 30,000 outlets of textile dealers in Kerala alone, employing nearly 2 lakh people mostly women. The enhanced GST rates would certainly erode the meagre profit margin of textile dealers as well as loss of employment for the womenfolk which would severely impact the earnings of large number of households in the State.

There was no indirect tax on cloth and textile material for years together. However, after lot of protest and resistance, the GST was introduced at 5 per cent. The industry took few years to absorb this tax impact of GST. Now, the government has taken the decision to increase the tax rate beginning New Year. This would fuel the growth of a parallel economy to avoid taxation and its implications. The increase in pricing of goods would lead to inflationary pressure on the economy, he added.

New GST rate

The new GST rate on clothing up to ₹1,000 per piece and footwear up to ₹1,000 a pair has been hiked from 5 to 12 per cent. The decision will impact the livelihood of small manufacturers, artisans and other sections. It would impact demand in an already consumption-hit economy and also raise inflationary pressures, he said.

The Central Government has also decided to boost the textile sector and had announced the Production Linked Incentive scheme. The increase in GST rate would nullify the benefits of PLI scheme to the mills. The intention of the government to boost the textile sector in the wake of severe competition from other countries would get severely impacted, he said adding that the merchants’ body is quite hopeful of a positive outcome.

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