In a partial relief for manmade textile units, GST on texurising, twisting, weaving and yarn dyeing has been reduced from 18 per cent to five per cent. But despite the relief, several looms and fabric makers will still have unutilised credit on their books, raising the cost of fabric by eight to ten per cent.
Partially oriented yarn, polyester filament yarn and staple fiber manufactured by virgin chips/granules are covered under the umbrella of manmade fibers and liable to be taxed at 18 per cent under GST. But other processes of textile yarn units, such as twisting, warping, doubling, dyeing, printing, bleaching, mercerising, texturing, multi-folding, cabeling, air mingiling, air-texturising, sizing etc, are not covered under the umbrella of manmade fibers. The job work rate of such processes at textile yarn units falls under the five per cent GST slab.
Manufacturers and exporters who make garments and buy fabric or do all the processes outside will also suffer as the duty refund will have to bear the burden of unutilised credit. They will be at a disadvantageous position as compared to composite mills that do all processes in-house. The textile industry has a pivotal position in the Indian economy. It is strong and competitive across the value chain. India has an abundant supply of raw material like cotton, wool, silk, jute, and manmade fiber.