'GST hike on textile products to cause loss of 15 lakh jobs'

KOLKATA: Principal Chief Advisor to the Chief Minister and Finance Department Amit Mitra on Friday said the Centre's decision of increasing the GST on several textile products to 12 per cent would lead to 15 lakh job loss with closure of 1 lakh units. He appealed to Union Finance minister Nirmala Sitharaman to reverse the decision as it would also adversely affect the GST collection as a whole.

The former Bengal Finance minister also condemned the decision to increase the GST on several textile products unilaterally without proper discussions in the forum of the GST Council.

In a video conference, Mitra pointed out how the textile industry — involving Rs 5.4 lakh crore economy and ensuring employment of nearly 4 crore people only in the manufacturing sector excluding cotton and jute farmers — in the country has to pay the penance for "another hasty" decision of the Centre of increasing the GST by 7 per cent.

"Profit after tax for the sector is very thin and that is only 1 to 3 per cent compared to that of 10 to even 15 per cent as in other sectors. From January 1 2022, the GST on several textile products is going to increase from 5 per cent to 12 per cent. As per the research conducted by an internationally acclaimed body, at least 1 lakh units have to pull down their shutters and it would lead to a job loss of at least 15 lakh people," Mitra said.

Strongly claiming that the Centre's assumption that it would help increasing the GST collection by Rs 7000 to Rs 10000 crore is a "myth", Mitra pointed out that if one lakh units close then "logically another one lakh can move out of the GST net as they would not have the working capital to keep their businesses rolling if the GST increases by 7 per cent". He apprehends that there would be a drop in GST collection instead as it would force it to move out of its ambit by not going for renewal. The sector would also face a drop in demand by three per cent.

"This comes when the cotton price has gone up by 70 per cent, apparel sector is also witnessing an inflation of 20 to 22 per cent and the country's aggregate wholesale price index inflation stands at 14.5 per cent and the unemployment has expanded by 10.48 per cent," he said adding that agitations are taking place across the country against the decision of increasing the GST.

Mitra maintained that the Centre has put forward the theory of correcting inverted duty structure addressing the synthetic or manmade fibre sector for which the GST is being reduced to 12 per cent from 18 per cent. But the sector involves only around 20 per cent of the total industry while the remaining is all about natural fibre.

In an appeal, he said: "It is not that a GST related decision has never been reversed. It would be my appeal to Union Finance minister Nirmala Sitharaman to reverse the decision of increasing the GST for several textile products to 12 per cent."

He also stated that it would also adversely affect Bengal as Metiabruz only witnesses a business worth Rs 20,000 crore. Besides procurement by retail chains, garments from Metiabruz also get exported to Jharkhand and Bihar. Similarly, there are 70,000 and 55,000 handlooms in Fulia and Sundergar respectively.