SIGA urges uniform rate of GST on yarn & fibre

The South Indian Garment Association (SIGA) has urged Union finance minister Arun Jaitley to levy uniform rate of GST on yarn & fibre, finished fabric & processed fabric and readymade garments. The association has also suggested, in a letter addressed to Jaitley, that no discrimination be made between branded and unbranded garments under the new tax regime.

The excise law at present discriminates between branded and unbranded garments. By merely attaching a label, a garment becomes branded and falls under the purview of excise duty, affecting garment industry adversely.

Most of the women's and men's traditional wear do not carry any label, while a section of manufacturers who are involved in manufacturing men’s casual and formal wear for mass market sale have no brand name/label and are out of the purview of excise duty. This discrimination is causing unwanted unhealthy business practices because there is no specific definition of brand relating to garments, said the association in the letter.

SIGA adds that the basis of GST is 'one tax one nation' and is devised for lowering rate of tax across the nation. Current rate of excise duty is at 2 per cent (with an abatement of 40 per cent) and the VAT rates are 5 per cent to 5.5 per cent in most of the states.

The garment industry provides maximum employment opportunities especially to women, uneducated, poor common man, backward and under privileged community of the society. All the sectors such as manufacturing, designing, marketing, logistics, packaging as well as retailing provide maximum jobs and there is a huge scope for further development in the country, according to SIGA.

However, operational costs and high rentals are making it difficult for medium and small entrepreneurs in manufacturing or retailing or related industry of packaging or logistics. Simultaneously, traditionally run tailoring shops are vanishing due to heavy running costs and higher wages of work force. Hence, it is becoming challenging for garment industry to develop further keeping pace with changing time and trends. The garment industry has become one of the biggest support system for the textile industry.

Garment Industry is a complex and sensitive industry governed with many complications in manufacturing with very high rate of rejection due to many reasons as well as fashion cycle, also run by climates, regional traditional wears, etc. In such a scenario, tax rates play a major role to sustain garment trade and industry.