Uniform tax for man-made fibre will help overcome tariffs: Industry

COIMBATORE: The textile sector hailed uniform GST for Man-Made Fibre (MMF) textiles as a historical tax reform to boost per capita consumption and enable the industry to navigate challenges posed by US tariffs.

“Slotting the entire value chain in the five per cent slab may increase domestic consumption by up to ten per cent in the short term and bring more revenue to the government. It will also enable the industry to navigate challenges posed by US tariffs,” said SK Sundararaman, chairman of the Southern India Mills Association (SIMA).

Stakeholders pointed out that depleting cotton production has curtailed the growth of the textile industry, as the country requires 22 billion kg of raw materials (fibres and filament yarns) as against the current availability of 12 billion kg to achieve the vision of increasing the textile business size from USD 172 billion to USD 350 billion and exports from USD 37 billion to USD 100 billion.

Globally, MMF textile and clothing fibre consumption accounts for 70 per cent. In comparison, the same accounts for only 30 per cent in India, mainly due to the tax structure, point out representatives of industries.

“The blockage of huge working capital due to duty inversion has also affected the profitability and growth of the Indian textile industry. Even the unique policy initiatives such as National Technical Textiles Mission (NTTM), Production Linked Incentive (PLI) Scheme and PM Mega Integrated Textile Regions and Apparel (PM MITRA) Parks scheme could not yield the envisaged results due to high rates of GST on MMF and yarns,” Sundararaman said.