Coimbatore: Welcoming the movement of the United States to reduce the tax rate of goods and services (GST) in man-made fibers (MMF) to 12% of 18%, the South Indian Mills Association (Sima) said it would help bring the cost of finished goods down.
There is a request from industrial players to bring the entire synthetic textile value chain under the 5% GST slab, as in the case of the cotton textile value chain.
In the notification on Thursday, the Ministry of Finance Union has brought all textile items, except cotton and cotton yarn which will continue to attract the 5% GST level, below the 12% GST tariff.
Ravi Sam, Chair, Sima, Thanking Center for Production-Linked Incentives (PLI) schemes for fiber, garment, and man-made technical textiles, expanding incentives from 7% to 15%.
With this government, he said the government had fulfilled both prerequisites to eliminate anti-dumping tasks on MMF and fiber raw materials, while handling the problem of upside down tasks.
When GST was introduced in 2017, he said, the center had brought the entire cotton textile value chain and work service under 5% GST.
Synthetic value chain, however, has a problem with a reverse task structure, because the fiber attracts 18% GST, 12% GST thread, 5% GST fabric and clothing under Rs 1,000 per piece of 5% GST and garment above RS 1,000 GST.
“This results in a large accumulation of input tax.
The PLI scheme has discussed anti-dumping tasks and reverse task issues.
Reformation will help the MMF value chain become competitive globally,” Sam said.
He said while the global consumption of cotton and MMF fiber is in the comparison of 35:65, the same is 65:35 in India, as MMF and fiber raw materials are expensive.
“Maintaining 5% GST for cotton yarn and cotton will benefit cotton farmers.”
GST Cut on man-made fibers will help reduce the cost of finished goods: Sima
