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Ministry & Associations not on the same page on 'Textile GST tax rates hike'

 

Since the notification from the Central Board of Indirect Taxes and Customs (CBIC) about the increase in GST of apparel, textiles, and footwear was received yesterday, associations have been raising concerns on the matter.

Central Board of Indirect Taxes and Customs , GST Portal

The Textile Ministry has said that removal of inverted duty structure in the Man-Made Fibre (MMF) sector with the notification of uniform GST at 12 percent on MMF yarn, fabrics and apparel, will save working capital and reduce compliance burden leading to growth and creation of jobs.

This argument has been considered valid by a few industrialists, however, associations are expressing disappointment in response to this crucial decision.

Chamber of Industrial & Commercial Undertakings (CICU) has sent a request letter to Finance Minister, Nirmala Sitharaman in which it has mentioned that a single rate without any cap & category on value may be introduced and the No­tification so issued increasing the tax rate from 5 percent to 12 percent to be withdrawn.

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“Goods which are lying in stock oldie busi­nessmen and sold on MRP the additional burden of 7% will be on the businessmen. This increase in tax rate will not only hamper the domestic trade it will affect the exports adversely.

Already the textile industry is not at a competent status with Countries like Vietnam, Indonesia, Bangladesh, and China. On the one hand, the Government talks about Make in India and Atmanirbhar Bharat on the other hand levy such high taxes creating an atmosphere of uncertainty and gloom,” said CICU.

Similarly, the Retailers Association of India (RAI), has said that this comes as a blow to the retail industry. They have appealed to Finance Minister, Nirmala Sitharaman, and have communicated concerns over the impact of the hike on already ailing apparel retail businesses.

Kumar Rajagopalan, CEO of, Retailers Association of India (RAI), said, “The increase in GST rates on textiles and apparel is not in anybody’s interest due to its impact.

Kumar Rajagopalan, CEO, Retailers Association of India: Retail Leadership  Summit (RLS) 2019 - YouTube

On the business side, it will add to the financial burden of an already-stressed sector, slow down its pace of recovery, and affect working capital requirements especially in the case of MSME businesses which account for 90% of the industry. 

On the consumer side, it will lead to a rise in the prices of garments, thereby hurting consumption. On the government side, in the long run, it may lead to many unorganised businesses going out of the GST net.”

As per RAI making the Entire Value Chain subject to a flat 5% GST rate will be more beneficial and a reasonable solution. KNN

(The news article has not been edited by DFU Publications staff)

 

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Ministry & Associations not on the same page on 'Textile GST tax rates hike'

The Finance Minister opposes a GST increase, citing the local garment industry as an example

24 November 2021, Mumbai:

The GST Council's recent decision to raise taxes on various textile and garment goods from 5% to 12% from January 2022 has sparked widespread outrage, with several trade organizations throughout India expressing their displeasure. 

The Retailers' Association of India (RAI), a trade association, has asked the Finance Minister to rethink his decision. The GST rise, according to Kumar Rajagopalan, CEO of RAI, is "not in anyone's interest." 

Retailers Association of India - YouTube

He went on to say that on the business side, it will add to an already-stressed sector's financial load, hinder its recovery, and influence working capital requirements, particularly for MSME enterprises, which account for 90% of the industry. 

On the consumer side, it will result in an increase in clothing prices, reducing demand. 

On the government's side, it may result in many unorganized enterprises opting out of the GST net in the long term." Rajat Sood, a senior member of the Chamber of Industrial and Commercial Undertakings (CICU) and a textile industry leader in Ludhiana, said the textile business had been seriously affected by Covid-19 and was still fighting for survival. 

CICU has formed a textile and garment sector committee - TEXTILE VALUE CHAIN

"In such conditions, the hike in textile tax rates will be a setback for the textile industry."

Finance Minister Nirmala Sitharaman, on the other hand, stated that this move is intended at rectifying the inverted duty structure that was causing corporations to accumulate input tax credits. She did not share the industry's concerns that this would result in higher finished product pricing. 

"Adjustments in rates may not always result in a price rise for clients. Bigger input rates resulted in higher reimbursements to taxpayers, which needed to be corrected. The GST Council resolved to correct the inverted duty structure.

The rate spike, according to Raja Shanmugam, President of the Tirupur Exporters Association (TEA), is a big issue for domestic players. They must increase charges to end customers from 5% to 12%. 

However, for exporters, this is a positive start. It will alleviate any accumulation that may occur as a result of the input tax credit." The decision, according to the Ministry of Textiles, would assist the man-made fiber (MMF) segment flourish and become a major employment source in the country.

Fun town Tirupur - Raja.M.Shanmugam Tirupur Exporters Association president  About school expo 2019 | Facebook

 

Dear Reader, we at DFU Publications are committed to providing the latest news updates on trade development and insights, to keep our readers informed. Stay tuned. Subscribe to our newsletter.

 

TOP 5:

  1. Flipkart, an Indian e-commerce company, collaborates with PUMA on the ‘1DER' line, which features batsman KL Rahul
  2. Consumers will determine growth of sustainable fashion e-comm in India
  3. Myntra to offer 1 mn styles from about 7,000 brands at the 'Big Fashion Festival'
  4. Maharashtra government honors VIP as 'Best Innerwear Brand' for 2021-22
  5. Nike strengthens retail presences with new store at DLF Mall of India, Noida

 

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The Finance Minister opposes a GST increase, citing the local garment industry as an example

Pepe Jeans is exiting a joint venture in India by selling a share to GOAT Brands

22 November 2021, Mumbai:

Pepe Jeans has chosen to sell its 50:50 joint venture in India with Dollar Industries Ltd, Pepe Jeans Innerfashion, to GOAT Brands Ltd. 

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In line with the condition dealing with Right of First Offer (ROFO) in the abovementioned JV agreement, Pepe Jeans Innerfashion offered Dollar to acquire Pepe's full interest. The latter, on the other hand, has relinquished the ROFO and agreed to the transfer of Pepe's shares to GOAT Brand Labs.

As a result, upon Pepe's transfer of shares to GOAT, the current JV agreement between Pepe and Dollar would be canceled. The dollar would be entering into a new JV arrangement with GOAT as a result of Pepe's proposed transfer of its interest to GOAT. 

The JV Company's existing licensing arrangement with Pepe Hungary KFT for the use of their brand 'Pepe Jeans/Pepe Jeans London' will be continued on such updated terms and circumstances as may be agreed upon between the JV Company and Pepe," Dollar Industries stated in a stock market statement.

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Rishi Vasudev and Rameswar Misra co-founded GOAT, which stands for Greatest Of All Time. It is built on Thrasio, a Boston-based e-commerce start-up that purchases small merchants and brands on big e-commerce platforms and assists them in growing their businesses.

Pepe Jeans India on Twitter: "Dare to Dance with #Powerflex denims.  #WeCanFly #DenimRange… "

 

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  1. Flipkart, an Indian e-commerce company, collaborates with PUMA on the ‘1DER' line, which features batsman KL Rahul
  2. Consumers will determine growth of sustainable fashion e-comm in India
  3. Myntra to offer 1 mn styles from about 7,000 brands at the 'Big Fashion Festival'
  4. Maharashtra government honors VIP as 'Best Innerwear Brand' for 2021-22
  5. Nike strengthens retail presences with new store at DLF Mall of India,Noida

 

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Pepe Jeans is exiting a joint venture in India by selling a share to GOAT Brands

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