With an eye on job creation, the government is doing its best to make the textile sector more competitive by pursuing a lower GST rate. It is willing to allow automobile and wine imports from the European Union in return for market access for Indian apparel. According to Textiles Secretary Rashmi Verma, India is at a critical juncture for like China, Indian textiles is moving out of global markets due to increase in labour costs and higher domestic demand. Therefore, this is the right time for the country to occupy the space left by China.

Conceding that Bangladesh is poised to overtake Indian garments and others like Vietnam, Kenya and Ethiopia are catching up, Verma said the government was seeking to nullify the competitive disadvantage that arises due to these countries getting duty-free access to the EU and US Indian products attract a 9.5 per cent duty in the EU.

Asking the industry to take advantage of the recently announced 3-year package for the sector, the Textile Secretary said the upcoming GST regime will make Indian textiles more competitive. It will solve many problems, the tax on tax will go away, input tax credits will be given and the differential tax rate on man-made fibres could be fixed in line with the long-standing demand for fibre neutrality, she claimed.

The industry should engage with a committee in the revenue department on its concerns about GST so that it got a fair deal. She hoped that most probably, the sector would likely get a lower tax rate. The GST Council, chaired by the finance minister, is slated to meet next week to start determining the tax rates for the new indirect tax regime.