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India’s textile industry suggests GST revision

The textile industry in India wants a cut in GST.It is felt a GST cut across the value chain from purified terephthalic acid (PTA), yarn and fabric to five per cent would enhance cash flow and reduce prices of synthetic yarn and fabric.

Currently, the cotton textile value chain — yarns, fabrics, apparel, and others — attracts a uniform GST rate of five per cent. Purified terephthalic acid, the key input in making polyester yarns and fabrics, attracts 18 per cent. And polyester yarn and fabric are taxed at 12 per cent and five per cent respectively. Because of the current inverted tax structure, the requirement of working capital for synthetic yarn goes up to the extent of six per cent due to higher GST incidence on raw material than finished products. In cotton fabric, there is no such inverted duty structure. When the cotton textile industry enjoys a five per cent GST, the industry feels the same should be applicable for synthetic textile players as well and that an uniform duty structure would help with long-term decision making on investment and competitiveness.

Synthetic fibers have grown by 5.9 per cent in the past decade. Polyester yarn is 78 per cent of the total volume of manmade fibers produced in India.