Telangana Industries and IT Minister K. T. Rama Rao has appealed to Union Finance Minister Nirmala Sitaraman not to take the proposal of increase in Goods and Services Tax on textiles and handlooms forward at the GST Council meeting scheduled for Friday.
The Union government’s proposal to increase the GST from 5% to 12% from January 1, 2022, would sound the death knell of the industry and lakhs of people would lose their jobs, he said in a letter to the Finance Minister.
The textile and handlooms sector was already bearing the brunt of the COVID-19 impact and the Union government had not provided any relief to the sector. Considering the scenario, the Centre should extend additional advantages and incentives to the sector. The increase in GST would compound the problems for the sector that was grappling with high cost of raw materials, yarn, chemicals, packaging material and transportation. “Production cost will escalate by 15-20% and this will adversely impact the demand. Due to this, there is the danger of many textiles and apparel units closing down and 15 lakh people losing jobs,” Mr.Rao said.
Small shops to be hit
The Telangana State Federation of Textile Associations said the increase in inputs and production cost had already resulted in job loss and wage cut. The proposed increase in GST would trigger a drop in consumption, forcing small traders to shut shop.
Federation president Prakash Ammanabolu said that during the pandemic many small shops had closed and the GST increase would worsen the situation.
