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GST to boost textile exports

The Goods and Services Tax (GST) will boost Indian textile exports to a great extent easing prices and making this industry internationally competitive. Hence, integrated companies should see this as an opportunity as the advent of GST will spur the textile sector with major capital investments bringing the cost of capital goods down.

An input credit will lead to lowered input costs and reduced prices of finished synthetic textiles at the consumer level. For natural fibers which are tax-exempt, GST will be an extra cost to companies and consumers. In case of natural fibers, like cotton and wool they are not taxed because they are naturally produced goods, any tax imposed now under the GST regime will be an extra cost to the ultimate consumer.

The export market will open up, the product will become cheaper, it will be internationally competitive and therefore, India can actually increase its share of the export market as far as textiles are concerned. Taxes paid on any capital goods being bought for modernisation of the plant or expansion of textile units will be available as a creditor gain. So the capital cost will come down for these industries and those who want to plan modernisation and expansion will benefit when GST is introduced.