Indian textile and clothing exports have stagnated during the last three years. One reason is the FTA/PTA competitive advantage gained by competing nations such as Bangladesh and Vietnam and the high tariff rates imposed on Indian textile and the clothing products in major textile markets such as the EU, the US, Canada and China.
So the industry has appealed to the Center to refund the accumulated input tax credit at the fabric stage in order to avoid cost escalation, encourage the Make in India initiative, reduce import of fabrics, avoid job losses etc. Certain GST anomalies need to be addressed on a war footing. The power loom sector and independent weaving units that produce over 95 per cent of the woven fabric are burdened with 18 per cent GST on yarn while the vertically integrated units do not have to face this problem as they need to pay 18 per cent GST for fibers and only five per cent GST on fabrics, and the cost difference works out to five per cent to seven per cent.
However, the entire cotton textile value chain and also all the textile job work come under the lowest and seamless slab of five per cent. The low rate will help protect the livelihood of over 40 million people involved in cotton farming and trading, make cotton the engine of growth for the Indian textile industry and clothe the people of the nation at an affordable cost.