P Nataraj, Managing Director of KPR Group, who has now been elected as the new Chairman of The Southern India Mills’ Association (SIMA), highly appreciated the bold and proactive initiatives taken by the Prime Minister, Narendra Modi and Union Textile Minister, Smriti Irani. He stated that demonetisation and GST were the two revolutionary policies interventions implemented by the NDA Government within a year to create a healthy business environment, curb evasion and corruption, ensure compliance, enhance global cost competitiveness, improve growth rate, facilitate ease of doing business, etc.
SIMA Chairman thanked and appreciated the strenuous efforts taken-up by the Irani and personally taking up the needs of the textile industry while implementing the GST, classifying the entire cotton textile value chain and also all the textile job work under the lowest and seamless GST slab of 5 per cent. He said that the lowest rate had protected the livelihoods of over 40 million people involved in cotton farming and trading community, made cotton to continue to remain as the engine of growth for the Indian textile industry and clothe the people of the nation at an affordable cost, etc.
SIMA Chairman stated that the textiles and clothing industry being predominantly decentralised and fragmented in nature, the overall business performance was significantly affected due to the levy of GST on fabric that had all along been exempted from VAT while the entire value chain was under optional route.
The decentralised weaving sector strongly believed that the fabric might be exempted from GST and therefore, suspended the purchases, demanded tax exemption and managing the business with the stock in hand. In the meanwhile, the entire textile value chain pipe line has become empty. Since, no changes were made in the GST rates applicable to textiles at the 21st GST Council meeting held on September 9, the rate of GST registration has now accelerated.
Nataraj stated that the demand for yarn in all the major markets especially Bhiwandi, Ichalkaranji and Kolkata have picked up due to Diwali demand for fabric and hoped that the market might become normal within a fortnight. He added that the unsold yarn stock lying with the spinning mills were also low.
The chairman pointed out that the global cotton position would be very comfortable during the year 2017-18 due to an increase in area under cotton cultivation by around 11 per cent and India is likely to get a record crop with 15 per cent increase in area and favourable monsoon and weather. He stated that the cotton price would also be comparatively lower throughout the cotton season and therefore, the domestic demand would pick up. India would have competitive advantage in the international market also with stable and lower cotton price.
Nataraj, however cautioned that there were few major problems and ill-effects due to certain GST anomalies that need to be addressed on a war footing to bring all the stakeholders of the textile industry under GST net, enable the Indian textiles and clothing products remain globally competitive. He stated the Indian textiles and clothing industry had been passing through continuous recession during the last three years mainly due to poor off-take in the global market, the FTA/PTA competitive advantage gained by the competing nations like Vietnam, Bangladesh, high tariff rates imposed on Indian textiles and clothing products in the major textile makers such as EU, US, Canada, China, etc. He pointed out that the total textiles and clothing exports had stagnated at around $40 billion during the last three years.