GST to be death knell for Surat's Rs 50,000-cr textile industry

Cheap imports put powerlooms at a bigger disadvantage

Rajesh Bhayani  |  Mumbai 

Dhiraj Shah, managing director of Shalon Industries, is worried he will have to pay a higher goods and services tax (GST) rate on synthetic yarn while the fabric he makes will attract a lower rate. With an annual turnover of Rs 500 crore, Shah’s unit makes synthetic fabric in Surat, Gujarat, and has a 1 per cent share of the city’s Rs 50,000-crore textiles business. Shah has two problems. He will collect 5 per cent GST from his buyer and pay 18 per cent duty on raw yarn. Also, his finished goods will face competition from cheap, imported fabric, which will attract an ...

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Read our full coverage on GST

GST to be death knell for Surat's Rs 50,000-cr textile industry

Cheap imports put powerlooms at a bigger disadvantage

Dhiraj Shah, MD of Shalon Industries pvt ltd having composite units for synthetic fabrics in Gujarat's Surat with Rs.500 crore annual turnover is worried due to high GST on synthetic yarn while fabric he makes will attract 5 per cent GST. He has 1 per cent share in 25 year old textile hub, Surat's Rs.50,000 crore annual business. His problems are twofold. He will collect less GST from his buyer and pay much higher duty on raw material yarn. And his fabric will face competition from cheap imported fabric which will become further cheaper by 11 per cent post GST. Surat is producing daily 4 crore metre fabric daily and only 20 per cent by composite mills who do all value addition in-house. For them fabric cost due to inverted duty structure or excess accumulated duty credit following high GST on yarn on their books and additional working capital cost will be around 3 per cent. 80 per cent fabric in Surat is made by power looms and shuttle less looms who will be already at a disadvantage . Dhiraj Shah, managing director of Shalon Industries, is worried he will have to pay a higher goods and services tax (GST) rate on synthetic yarn while the fabric he makes will attract a lower rate. With an annual turnover of Rs 500 crore, Shah’s unit makes synthetic fabric in Surat, Gujarat, and has a 1 per cent share of the city’s Rs 50,000-crore textiles business. Shah has two problems. He will collect 5 per cent GST from his buyer and pay 18 per cent duty on raw yarn. Also, his finished goods will face competition from cheap, imported fabric, which will attract an ... image
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