VIJAYAWADA: The government’s decision to increase Goods and Services Tax (GST) to 12 per cent from the existing five per cent on clothes will prove bitter to people and traders in the New Year as the hike is applicable from January 1.
The entire textile trade and industry is in shock over the government's decision to increase the tax on textile which is the second-largest revenue-generating commodity after agriculture. The cloth traders started protests against the GST hike and are planning to intensify agitations.
Vijayawada, Chirala, Guntur, Rajahmundry, Kakinada, Tuni, Ongole, Venkatagiri, Dharmavaram, Rayadurgam, Kavali, Nellore, Srikakulam and Vizianagaram are famous for cloth business. There are above 50,000 cloth shops in 13 districts in the state with a turnover of Rs 30,000 crore. The cloth traders said presently Rs 1,500 crore is imposed on purchasers under five per cent GST and this would be increased to Rs 3,600 crore due to the increase of GST to 12 per cent. They said nearly Rs 2,100 crore would be put as an extra burden due to the increase of GST on people in New Year 2022.
According to industry sources, since almost 80 per cent of fabric production in the country is in the unorganised sector, increasing the GST to 12 per cent for fabrics will hit the power loom and handloom weavers. The market is likely to see a 15-20 per cent price rise in garments soon since there is an unprecedented price increase of raw materials like yarn, packing materials and freight. The traders deplore that it is unfortunate that those who buy clothes costing less than Rs 1,000 will be the most affected.
They further deplored that on one hand the government was emphasising on Atma Nirbhar Bharat and, on the other, these moves of levying high taxes was creating an atmosphere of uncertainty not only on the consumers but also the manufacturers.
Cloth traders said trading activity was largely hit due to Covid-19 pandemic for the past two years and slowly recovering due to a decrease in new infections for the past few weeks. They said the majority of traders incurred huge losses as people preferred food and health during the Corona crisis and further absence of marriages and other social programmes. They deplored that traders hoped to come back in the cloth trading in the New Year 2022 but their hopes shattered with the increase of GST to 12 per cent.
Traders N. Durga Rao and others said transportation charges were largely hiked due to increase of petrol and diesel prices and this GST increase would turn a bane to textiles, handlooms and readymade clothes. They sought the government to roll back the GST increase.
AP Textile Federation state general secretary Bachu Prasad said clothes were essential commodities but people were facing financial crisis due to five per cent GST hence traders were demanding to reduce GST for the past few years.
He said they were planning to intensify protests and agitations if the Union government failed to roll back the increased GST.
YSR Congress MLA Murugudu Hanumantha Rao objected to the GST hike as unjustifiable. He said he would take the GST issue to the notice of Chief Minister Y.S. Jagan Mohan Reddy.
