New Delhi, Sunday, June 04, 2017: CITI Chairman, Shri J. Thulasidharan welcomed the announcement made by the Hon’ble Union Finance Minister to keep the GST rates for all natural fibres including cotton, cotton yarn, fabrics and readymade garments valued below Rs.1000/- at 5 per cent. Shri Thulasidharan complimented the government for keeping the rates at low level so that textile sector, especially cotton based products can grow faster. He also pointed that the “new rates will help us to prepare ourselves for the newer regime as rates for cotton and natural fibres are in sync with our expectations”.

Chairman CITI has expressed his gratitude to Smt. Smriti Zubin Irani Union Textile Minister and said, “on behalf of CITI committee members and textile industry, I extend my gratitude and appreciation to textile Minister for keeping her promises and accommodating industry demand of 5% GST especially for cotton and natural fibre based textile items”.

Taking a cautionary note, Chairman, CITI observed that 18% GST rate levied on manmade fibre and synthetic yarn would have inverted duty structure problem as the fabric would attract only 5% GST rate. He also pointed out that the high rates announced for MMF fabric and yarn, dying and printing units, embroidery items at 18 per cent can lead to an increase in input costs and can adversely affect the entire textile value chain.

Indian textile and apparel sector which is the largest employment providing sector of the Indian manufacturing sector has been facing huge competitive challenges from neighbouring textile producing countries like Bangladesh, Vietnam and China. Keeping the tax rates high will not only escalate textile inflation but will lead to cheap imports from these countries. This will affect Indian manufacturing sector unviable to operate.

The textile sector is suffering from various disadvantages like high energy costs and infrastructure bottlenecks. Keeping the rates of key inputs at a higher level will further affect the competitiveness of the sector, said CITI Chairman.

Shri J. Thulasidharan urged the government to reconsider the rates of MMF products and bring it at 12 per cent. India is already suffering a huge competitive disadvantage in the global textile market as the MMF based textile products are attracting higher rates of import duty. Keeping the GST rates at this rate will undoubtedly cripple hundreds of small and medium synthetic textile manufacturers, said CITI Chairman.

CITI Chairman has also appealed to the Government to exempt the textile jobs from service tax as it would benefit the predominantly decentralized and MSME nature of the industry, especially the powerloom, knitting, processing and garment sectors.