GST reduction on synthetic fibers will help reduce the cost of finished products: SIMA | Coimbatore News
Coimbatore: Welcoming the decision of the Union government to reduce the rate of the Goods and Services Tax (GST) on artificial fiber (MMF) to 12% instead of 18%, the Southern India Mills Association ( SIMA) said it would help bring the cost of finished goods down.
There was a demand 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 a notification Thursday, the Union Ministry of Finance had brought back all textile products, except cotton and cotton yarn, which would continue to benefit from a 5% GST rate, below the rate of 12% GST.
Ravi Sam, president of SIMA, thanked the Center for the Production Incentive Program (PLI) for certain man-made fibers, clothing and technical textiles, extending the incentives from 7% to 15%.
With this, he said, the government has fulfilled the two preconditions for the removal of anti-dumping duties on raw materials and MMF fibers, while also tackling reverse duty issues.
When the GST was introduced in 2017, he said, the Center reduced the entire cotton textiles value chain and labor services to a 5% GST rate. The synthetic value chain, however, had problems with the reverse tariff structure, as fiber attracted 18% TPS, yarn 12% TPS, fabric 5% TPS, and clothing below Rs 1,000 per piece 5 % GST and clothing over Rs 1,000 and 12% GST.
“This has resulted in a huge accumulation of input tax. The PLI regime has dealt with the issues of anti-dumping and reverse duties. The reform will help the MMF value chain to become globally competitive, ”said Sam.
He said that while the world consumption of cotton and MMF fiber was in a ratio of 35:65, so was 65:35 in India, because the raw material and MMF fiber were expensive. “Maintaining the 5% GST on cotton and cotton yarn will benefit cotton producers. “