Imposition of 5% GST on job work in the textile sector is expected to badly hit the industry across India, especially States like Karnataka that has a large number of garment and textile units.
Though some garment units work out of a single factory floor in places like Bengaluru, job work or outsourcing of services constitute a significant part of the industry. Karnataka contributes 20% to the country’s apparel production.
Several textile shops in Bengaluru remained shut in protest against the new tax regime on Friday. Cloth markets in major cities in Gujarat too were shut. Earlier, the GST council had clamped 18% tax on job work but reduced it to 5% following protests.
Textile job works such as cutting, embroidery, finishing, washing or pressing, packing, bleaching, dyeing, printing, knitting, and colouring has been brought under the 5% GST slab. Earlier, there was no tax for these works.
Hanumanthe Gowda, KASSIA vice-president, who also runs a silk textile unit in Bengaluru, said the council has imposed 5% tax irrespective of the quantum of work. Powerloom and handloom units across the State and in particular in Ballari, Doddaballapur, Kanakapura, Ramanagaram, Chennapatna, Hubballi-Dharwad, Belagavi, and Vijayapura will face severe difficulties. “About 90% job work people are uneducated and will unable to file tax online,” Mr. Gowda said. Manufacturers who do not have integrated units to complete embroidery, printing and finishing would suffer great loss, KASSIA secretary B. Praveen said. Industry representatives have decided to meet Textile Minister Smriti Irani seeking tax exemption for the sector, Mr. Gowda said.