The Synthetic and Rayon Textile Export Promotion Council (SRTEPC) wants a reduction of GST on yarns from 18 per cent to 12 per cent. With GST, the tax rate on manmade yarns has been increased from 12 per cent to 18 per cent, which has made the cost of fabrics higher.

SRTEPC says, GST has had an adverse impact on the exports of manmade fiber textiles and if the decline is not arrested employment generation and foreign exchange earnings will be affected. GST duty on spun, textured, fully drawn, warp and knit yarns is 18 per cent. The GST on fabrics is five per cent. This has resulted in huge accumulation of unutilized credit with weavers.

Blocked un-rebated state input taxes and duties like transmission charges, electricity duty, cross subsidy on electricity bills, water cess, green tax, local body taxes, road taxes, labor cess etc. are about five per cent of the freight on board value of textile exports. These are not adjusted in drawback or rebate of state levies scheme to yarn and fabric exporters.

SRTEPC has urged for an immediate reduction of GST on yarns. Another fallout from GST is the big threat of imports of fabrics and garments from China, Bangladesh and Sri Lanka. Earlier imports had a 12.5 per cent countervailing duty, which wasn’t adjustable. Now they would attract five per cent GST, which is adjustable against subsequent sales.