Multi-stage and different tax slabs are affecting the man-made fibre (MMF) sector, according to the industry.
Narain Aggarwal, chairman of the Synthetic and Rayon Textiles Export Promotion Council, told The Hindu that the MMF sector saw almost 9% growth in the domestic market every year.
‘Exports stagnant’
However, exports were stagnant for the last couple of years. The export target for this financial year was $7.5 billion.
The Indian MMF sector was expensive in the international market by 5% to 8 % compared to the East Asian countries. This was mainly because of multi-level taxes that were not fully rebated, and high interest rates, he said.
In China, the GST was 17% on textiles, while in Vietnam and Bangladesh it was 15%. In India, there were multiple rates for different fibres, Mr. Aggarwal said.
“Textiles are an integrated economy and the accumulated credit under GST from raw materials and capital goods investments are affecting the industry. It blocks investments.” “We have been speaking on these issues and the Ministry of Textiles has taken these up with the ministries concerned,” he said.
Mr. Aggarwal said the average annual wage rate in China was $8,000 and in Vietnam it was $3,000. In India, it was $1,500.
The actual production cost for the domestic MMF sector is lower compared to China. But, “we are not competitive because of taxes,” he added.
On increasing import of MMF yarn, fabric and garments, he said that prior to GST, the import duty on MMF was 26.42 %. Now, it was 15%. So, the domestic sector has had a disadvantage and imports had gone up. The industry took it up with the governemnt and the basic customs duty rates were increased for fabric. In the case of yarn and readymade garments, the imports were still high, he said.