Zero GST on handloom sector
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Handloom sector is facing severe crisis due to GST imposition. Indian government has been asked to make it Zero GST. This is presentation on the issues and concerns related to this sector and GST.
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Zero GST on handloom sector
- 1. Goods and Services Tax: Huge Impact on Handloom Sector Prof. Narasimha Reddy Donthi Public Policy Expert
- 2. 43rd GST Council, 28th May, 2021, New Delhi
- 3. 45th GST Council, 17th September, 2021, New Delhi
- 4. 45th GST Council, 17th September, 2021, New Delhi
- 5. Parliamentary Committee Report, March, 2020
- 6. Parliamentary Committee Report, March, 2020
- 7. Background Textile Sector in India
- 8. 0 500000 1000000 1500000 2000000 2500000 Global Market Indian Market Volumes in Rs. Crores Textile and apparel industry in India is Rs.2,20,500 crores Global market is Rs.20,25,000 crores
- 9. Types of Fibres Natural fibres • Cotton • Silk • Jute • Wool Natural fibres • Mesta/ Kenaf (Patsan) • Roselle (Patwa) • Sunhemp (San) • Ramie (Reha) • Sisal • Pineapple • Banana • Palm • Coconut Man-made fibres • Acetate • Nylon • Polyester • Acrylic • Rayon • High modulus Rayon • Spandex Double blends • 65% polyester/ 35% cotton • 70% acrylic/ 30% Avril rayon • 80% cotton/ 20% wool • 80% Acrylic/ 20% cotton • 55% polyester/ 45% rayon
- 10. Global Fibre Consumption 9.2 billion kgs in 1950 62.6 billion kgs in 2008 92.37 billion kgs in 2011 108 billion kgs in 2019 Fibre Consumption to increase, with the growth of global textile market
- 11. Indian Fibre Consumption 0. 6 billion kgs, now 1.2 billion kgs in 2012 2.0 billion kgs in 2020 Fibre Consumption to increase, with the growth of domestic and exports textile markets
- 16. Cotton Supply Chain • Farming • Ginning • Trading Aggregation • Packaging • Spinning • Trading Disaggregation • Handloom • Mills • Powerlooms • Hosiery Wholesale/Retail
- 17. Conflicting Expectations: Cotton Supply Chain Farmers • Pricing • Cost of production • Risks • Agri-technologies • Cotton Exports Processors • Lower procurement price • Higher market price • Technology • Taxation • Yarn Exports Users (handloom) • Access to yarn • Rising prices • Imitation products • Synthetic/blends fibres • Yarn Exports Users (modern) • Rising prices • Blends • Fabric imports • Export risks • Yarn Exports • Want domestic market control
- 18. Silk Supply Chain • Silk worm seed producers • Farmers/ rearers • Extraction • Trading Aggregation • Twisters • Reelers • Traders Disaggregation • Handloom • Mills • Powerlooms Wholesale/ Retail
- 19. Conflicting Expectations: Silk Supply Chain Fibre Producers • Pricing • Cost of production • Risks • Agri- technologies • Marketing Infrastructure Processors • Decreasing supply • Cost of production • Technology • Taxation Users (handloom) • Access to yarn • Rising prices • Chinese yarn and fabric imports • Artificial silk products Users (modern) • Rising prices • Chinese yarn and fabric imports • Export fluctuations • Want domestic markets
- 20. Conflicting Expectations:Fibre Supply Chains Handloom Weavers Mechanised, automation-based weavers Fibre Producers Fibre Processors Policies
- 21. Fibre Supply Chains: Policy Vaccuum Indian Textile Policy, 2000 Technology Mission on Cotton National Jute Policy No Policy on silk, wool, organic cotton, MMF, etc.
- 22. Fibre Supply Chains: No National Policy • Planning Commission • Ministry of Agriculture • Ministry of Textiles • Ministry of Commerce National Foreign Trade Policy Indian Textile Policy Five year Plans No Policy with fibre focus
- 23. National Textile Sector Strengths Diversity Complete supply chain in all fibres Huge domestic markets Weaknesses Infrastructure support Working Capital Support Rigid practices Asymmetric flow of information Opportunities Small and flexible production Demand for environment- friendly production and consumption Threats Cheap Imports Firm-level policies Wrong subsidies Automated, large textile machinery
- 24. Fibre Supply Chains: No State Policy/ Department •Jute •Cotton •Wool •Silk Sericulture/ Agriculture Dept. Animal Husbandry ?? Agriculture
- 25. Cumulative Impacts No Indian Textile Policy No Handloom Policy Decreasing schemes and budget allocations to handloom sector Ministry of Textiles orientation to modern, automated textile industry No thinking on linking Indian textiles with Sustainable Development Goals (SDGs)
- 26. 4,594.82 0.00 1,000.00 2,000.00 3,000.00 4,000.00 5,000.00 6,000.00 7,000.00 8,000.00 9,000.00 Handloom Allocations Textile Allocations nreddy.donthi20@gmail.com
- 28. Existing Indirect Tax Structure 28 Central Levies Customs Duty Service Tax Excise Duty Cess Central Sales Tax Purchase Tax Entertainment Tax Entry Tax & Octroi Luxury Tax VAT State Levies
- 29. Goods Not Covered under GST 5 Petroleum Products •Petrol •Diesel •Petroleum Crude •Aviation fuel •Natural Gas Alcohol for Human Consumption Power Sector
- 30. Taxes Not Likely to be Subsumed under GST State Taxes: • Road & Passenger Tax • Toll Tax • Property Tax • Electricity Duty • Stamp Duty & Registration Fees Central Taxes: • Customs Duty • Other Customs Duty like anti-dumping duty, Safeguard duty etc., • Export Duty
- 32. Features of Constitution Amendment Act Concurrent jurisdiction for levy & collection of GST by the Centre (CGST) and the States (SGST) Centre to levy and collect IGST on supplies in the course of inter- State trade or commerce including imports Compensation for loss of revenue to States for five years GST on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas & aviation turbine fuel to be levied from a later date on recommendations of Council 32
- 33. Overview of GST Returns (need to be updated) GSTR 1 Statement of Outward Supplies GSTR 2 Statement of Inward Supplies GSTR 3 Monthly GST Return GSTR 5 Non-resident taxable persons GSTR 6 Input Service Distributor (ISD) Return GSTR 7 Tax Deduction at Source (TDS) return GSTR 8 Tax Collection at Source (TCS) Return GSTR 11 Inward Supplies for Government Bodies Monthly GSTR 4 Compounding taxpayer Quarterly GSTR 10 Final return after cancellation, within three month of cancellation Unscheduled GSTR 9 Annual GST Return GSTR 9A Annual return for Compounding Taxpayer GSTR 9B Reconciliation Statement Annual
- 35. Report on ‘Implications of Goods and Services Tax (GST) for Indian Textiles Sector’ Recommended policy options for Khadi and Handlooms, Cotton textiles, and carpet weaving Zero rating Exemption Lower rate of tax Standard rate of tax with appropriate subsidies
- 36. GST Impact on Handloom Cost burden on production to increase Handloom products become uncompetitive at retail level Natural fibre costs to grow Decreasing access Market position to shift GST hassles to discourage investment flows GST-induced fibre neutral policy discriminates
- 37. GST Impact on Handloom 18 % burden on small-scale reeling, twisting, winding and other machines will impact silk and wool sectors directly. 53 returns per year adds to operational costs Local consumption is discouraged Transit and services tax burden to be explored
- 38. Demands: #ZeroGSTforHandlooms Bring out a Textile Fiber Products Identification/ Labelling Act Establish a Natural Fibre Fund, to support lakhs of livelihoods Increase the targets for natural fibre and fabric production through environment friendly methods Capital infusion through carbon-credit mechanisms
Notes de l'éditeur
- 71%: 39%
- 31%: 69%
- 53,000 villages