The Southern India Mills Association (SIMA) has welcomed the GST era for the textile industry. It says a seamless tax structure for the entire cotton textile value chain is a great step forward. With the implementation of GST, all indirect taxes would be merged. So far the textile industry had been suffering with numerous taxes and different types of cess which were not duty drawback compatible and therefore adding to the cost, thus making the industry uncompetitive especially the micro, small and medium enterprises and decentralized segments.

Various exemptions and loopholes in the laws enabled a major portion of manufacturers and traders in the textile value chain to opt for tax evasion by mis-declaration and by various other methods but that would end. The country, after independence, for the last 70 years was struggling with a complex tax structure, rigid and antiquated laws that were major stumbling blocks to achieve a sustained economic growth rate.

Tamil Nadu accounts for a third of the textile business in India. SIMA feels 2017-18 will be a good year for the cotton textile industry with a sound tax ecosystem and real time governance coupled with availability of surplus cotton. Interestingly, SIMA now wants some taxes and levies that are not subsumed in GST like the market committee fee and various other municipal taxes to be also scrapped.