The Telangana government has demanded the Union government to reconsider the decision of increasing the Goods and Services Tax (GST) on textile and handloom sectors. In a letter to Union Finance Minister Nirmala Sitharaman, Telangana's Industry Minister KT Rama Rao has appealed to her not to take this proposal forward in the GST Council meeting which will be chaired by her on Friday, December 31.
He said the industry and weaver communities have staged several protests demanding the Union government to waive off the 5% GST on handloom products and its raw material. “Instead the Union government is planning to increase it to 12% from January 1, 2022, which will strike a death knell to the industry and lakhs of people will lose their jobs,” he said.
“The textile and handloom sector provide the second highest employment in our country. This sector is already bearing the brunt of COVID-19 and the Union government has not even provided any relief to the sector. Considering the current scenario, the Union government must extend additional advantages and incentives to the sector,” said KTR, as the Minister is popularly known.
He added that the increase in GST will impact about 80-85% of the handloom and textile production. “As it is, the cost of raw materials, yarn, chemicals, packaging material and transportation have gone up substantially due to the pandemic,” he said. In addition to these costs, the increase in GST will further escalate the production costs by 15 to 20% according to him.
"This would adversely impact the demand, which is essential for the survival of the industry. Due to this there is danger of many textiles and apparels units closing down. There is every possibility of 15 lakh people losing their jobs in the handlooms sector due to the increase in GST, the Minister said.
"This will put an additional burden on the middle-income groups, which usually buy garments with a budget of Rs 1000," he added.
KTR said the Union government, which had failed in fulfilling the promise of providing two crore jobs every year, must withdraw the decision to increase the GST as it would impact the employment of crores of people in the handlooms and textiles sector.
“Due to the Union government's policies, the country was registering marginal growth in the sector compared to smaller countries like Bangladesh. All this despite there being tremendous scope for growth in the sector and the decision to increase GST will affect getting international investments,” KTR said.
The Minister added that the farmers have already taken to the streets and forced a rollback of ill-conceived farm laws. He urged the Union government to immediately withdraw the decision to increase GST on textiles and handlooms, otherwise weavers of this country would repeat the protests.