OPINIONMAKERS@ The Hush Post: Textile is one of the oldest trades in India with maximum number of beneficiaries, after agriculture. It literally gives Ludhiana its bread and butter and gave it the sobriquet ‘the Manchester of India’. It also helps run the culture of Uttar Pradesh and Bihar as a trickle-down effect what with lakhs of workers from the eastern part of India employed here. The rural sector is mainly involved in handloom sector making niwar, khes and durries and is gradually being wiped out by the demon of industrialisation. The urban sector is inching towards loses bit by bit. We can start at the top where we have mainly spinning mills which manufacture yarns from various fibres, though, originally setup for cotton, cotton being agricultural produce. These mills remain unaffected by GST, as GST has replaced excise duty, CST, VAT, etc. But because these mills are old and inefficient they are finding it dificult to survive, many have graduated to polyester, viscose, acrylic, etc but things are getting tough because of high spinning costs. The yarn produced is consumed by knitting and weaving mills of Ludhiana and Amritsar though large chucks of synthetic yarn is being sourced from other countries like China, Indonesia, Nepal and Malaysia.
The large corporates have all the manufacturing facilities in-house and cater to the end user enjoying the complete chain of value addition. The medium and small scale manufacturers though are finding it very tough as this sector was not exposed to excise and tax regime. Virtually all the fabric dealers were excise and VAT free in the earlier regime. So, it is an uphill task to organise themselves to fit into the slot created by the finance minister. For example, yarn has a GST of 12% and the cost of converting it into fabric includes another 5% of GST. Other factors are common in both the cases still composite unit can kill the MSME by higher margins. Anybody can tell that we are losing the Indian spirit (swadesi) and are aping capitalism from the likes of the USA and other countries. Where this will lead to is no guesswork. It will again put India into economic slavery. We have approximately 12,000 units involved in the manufacture of products using yarn or fabric as raw material. I am afraid majority will sine die, giving their ashes and bones to corporate vultures.
This is the die hard Indian spirit which keeps the whole lot of manufacturers, traders, labourers, transporters and affiliate industry such as dying, finishing, printing, etc afloat despite the odds being against them. The threat to survival is also enhanced by countries like China, Nepal and neighbouring states, which are providing synthetic yarn at lower prices as customs have been replaced by GST.
All said and done, the small Indian business is really one man show and we cannot expect them to comply with GST maze and its draconian provisions. We have taken invaders for last many centuries and survived through our spirit of pride, faith and liberty. But this time the damage is coming from the insiders and as all know that cannot be countered.
Anurag Poddar (The writer is a businessman and has an indepth understanding of yarn and hosiery business).