GST Council meeting: New steps announced help election-bound Gujarat in particular

Of the 27 broad categories of items that saw a reduction in GST rates, at least eight were in segments where Gujarat is a dominant player. Representational

AMONG the relief measures announced Friday by the GST Council, a number of them will particularly help enterprises and exporters from Gujarat which goes to polls later this year. These include revised tax slabs for man-made filament, synthetic yarn and fibre, a staple input of Gujarat’s massive man-made textile industry’ concessions for cullet and scrap glass, as well as at least two food items that come predominantly from Gujarat. Of the 27 broad categories of items that saw a reduction in GST rates, at least eight were in segments where Gujarat is a dominant player.

These include sewing thread of manmade filaments and thread of manmade staple fibres; synthetic filament yarn (nylon, polyester); and artificial filament yarn such as viscose and rayon, as well as yarn of manmade staple fibres. In these categories, rates were brought down from 12 to 5 per cent. Alongside these goods, the rate for food items such as khakhra, as well as categories of “namkeens.” were brought down from 12 per cent to 5 per cent. Another item where tariff was brought down is the “cullet or other waste or scrap of glass,” a segment where Gujarat has a significant industrial footprint in Morbi and Vadodara.

Read | GST relief for small firms, rates cut for many groups

The slew of relief measures for exporters will also help industry in Gujarat, a major exporting hub. While the state accounts for 12 per cent of the country’s textile exports, it’s the largest manufacturer of manmade filament fibre (around 38 per cent of India’s total production) and manmade fibre (around 31 per cent). Gujarat is also a hub of gem and jewellery exporters in the country accounting for more than 90 per cent of diamond export from India.

The gem and jewellery sector is the second-highest contributor to Indian commodity exports with a share of around 13 per cent, according to Gujarat government data. Data from the Ministry of Micro, Small and Medium Enterprises shows that more than 5 per cent of the units in small scale industry, or 530,314 units out of the total of 1.05 crore in the country, are in Gujarat.

The textiles and apparel sector, where exports account for about 40 per cent of production, is one business hit hard due to demonetisation and the transition to GST.

The number of workers affected due to closure of cotton and man-made fibre textile units (the bigger units that comprise the non-SSI segment of the industry) during 2016-17 were 4,356 on account of the closure of 18 units, according to official Textile Ministry stats on non-SSI units.

GST Council has done some work on rates to ease pain: Revenue Secretary Hasmukh Adhia

During the previous two years, the numbers were 7,938 workers affected by the closure of 27 units in 2015-16 and 5,384 workers affected from the closure of 21 units in 2014-15, taking the cumulative figure to over 17,600 workers impacted by the closure of 67 units in the last three years. The distress in the SSI segment is much higher, even though there is not enough data. According to Surat GST Sangharsh Samithi president Tarachand Kasat, units in the filament yarn and man-made fibre product business in Surat are losing around Rs.1.25 crore a day since the July GST rollout.

A 2016 study by industry lobby group Assocham recorded that Gujarat and Maharashtra accounted for about 46 per cent of the country’s merchandise exports, according to an analysis of data between 2007-08 and 2014-15.

Also, Gujarat figures among the six states where three-fourths of the operational SEZs are located, the others being Maharashtra, Andhra Pradesh, Telangana, Karnataka and Tamil Nadu.