Synthetic fabric manufacturers feel that with the new GST rates, the cost of imported fabric will become much lower than the domestically manufactured variant.

The industry fears that cheaper imports will hit their production. Under the GST structure, an 18 per cent tax on domestically manufactured synthetic fiber and yarn has been imposed, making imported fabric cheaper than domestically manufactured fabric.

As per the new tax structure, synthetic fabric can be imported at a basic rate of customs duty, which is 7.5 per cent plus the five per cent GST rate. In the current regime, synthetic fabric is being imported at a compounded duty of approximately 26.75 per cent, which includes a 7.5 customs duty, 12.5 per cent countervailing duty and four per cent special additional duty.

Synthetic fabric manufacturers say they are already reeling under the pressure of cheaper imports, mainly from China and that Chinese manufacturers, who enjoy roughly 22 different subsidies from the government, produce the fabric much cheaper.

The GST rates for the entire value chain, after considering the input tax credit, will make synthetic fabric costlier by five or six per cent. Though service tax has been lowered to five per cent, made-ups and garments have not been mentioned in the list and this will further escalate price of garments.