Report says many of cloth making units have stockpile of unsold fabric as no one is buying them.
Mumbai: The Goods and Services Tax that was rolled out nationwide on July 1 has forced the textile industry to start protests across the country due to a 5 per cent GST rate "imposed" on them.
In the textile town of Bhiwandi, around 45 km from Mumbai, those who are running textile units have already started feeling the pinch after 10 days when the new indirect tax regime came into existence.
"I have over 10 lakh metres of unsold cloth in storage. I don’t have more space. Moreover, there is no yarn available amid the chaos around GST. We have been forced to close operations,” The Indian Express quoted Fayyaz Ahmed, owner of FT Textiles as saying.
In Gujarat, traders in large number have taken to the street in protest against GST on textile industry. Weavers in Bhiwandi feel that their business will further take a hit due to the ongoing strike in neigbouring Gujarat.
Ahmed's FT Textiles runs 5,000 powerlooms. Bhiwandi has over 4 lakh powerloom machines run by workers many of them are from north India who had migrated to the town in search of bread.
Besides owners who are slashing production, there are many workers who are losing their livelihood. The IE report adds that a woman who earned Rs 14,000 a month by working at a twisting ans mending machine lost her job. She has school going kids and an ailing husband.
Master weavers or those who own powerloom units are worried over 'cascading' effect of GST as they have to pay taxes for purchasing yarn. According to reports the government has put man-made yarns under 18 per cent GST bracket. On cotton yarn there is 5 per cent GST.
Malegaon, another textile hub in Maharashtra, has over 2 lakh powerloom machines. Though the town has not witnessed any GST-related protest, powerloom owners here have expressed their resentment over 5 per cent GST on fabric.
“We don't know who will pay GST on yarn,” The Economic Times quoted Ansari Khurshid Ahmed, president, Malegaon Industrial Management Association as saying. He adds that as there is no clarity it is harder for them to explain small weavers the nitty-gritty of GST.
Kailash Mehta, president, Grey Cloth Traders Association in Malegaon told the ET, “We are ready to get a GST number, provided our buyers and suppliers take it too.” Many other weavers said they still don't have clarity on GST for textile sector.
Down south in Erode in Tamil Nadu textile industry along with the powerloom owners has been on strike for more than past few days. As many as 10,000 powerloom machines have stopped weaving clothes against 5 per cent GST on fabric since they started the agitation.