Union Budget 2022: The textile industry expects a rollback of GST Increase
Textile Industry has rebounded
After recovering from the COVID 19 slump, the Indian textile industry has rebounded very strongly. Slowing Chinese economic growth and anti-China sentiment have aided Indian textile manufacturers and exporters in capturing a larger share of the global textile market and strengthening their presence in US and European Union markets. Chinese textile sanctions have also boosted Indian textile exports. According to a CRISIL analysis, textile firms are on track to recover in 2022. Additionally, government initiatives such as the Production Linked Incentive Plan, the establishment of mega textile parks, and the extension of the Rebate of State and Central Taxes and Levies scheme are assisting the sector.
The textile industry believes that now is the time for the Centre to provide appropriate support to the industry in order to fuel its next phase of growth, and it anticipates that this will be addressed in the upcoming Union Budget 2022.
Involve the grassroots as much as possible
The textile sector expects the upcoming Union Budget of 2022 to roll back the GST increase, stabilize cotton prices, simplify CAROTAR 2020, and incentivize the use of renewable energy. Despite industry concerns, the government increased the GST on textiles from 5% to 12%, with effect from January 1, 2022. This will have a negative impact on the growth of the textile industry, which contributes significantly to job creation and export earnings. It is requested that the GST rates remain at 5%. The recent hike in GST is severely impacting the sourcing of raw materials. An increase in raw material costs results in a direct hike in cost of fashion. The brands with set audiences and customers who support the causes of slow fashion have the capacity to create awareness amongst their customers, though not an easy task. However, it is the larger supply chain, specifically the small handloom weaving clusters that suffer the worst. With an increase in GST, they face the risk of losing a steady influx of orders and business, since the cost of the fabric increases drastically. Thus, it is necessary that any new regulations that come out should include the voices of the grassroots if we want to sustain the cottage handloom and handicraft industry. Representation of the artisanal clusters in the decision-making apex bodies is nil, while the hit is the worst and potentially tremendous.
Encourage traditional industries and artisans
The handloom and handicrafts sector is a heritage sector that not only employs a vast variety of rural artisans but is also the second-largest revenue-generating sector in the country. It is the responsibility of the fashion and textiles industry at large along-with the government authorities to ensure that taxation policies give the sector a boost. Rather, the current hike in December seems to be negatively affecting the industry. Thus, in the upcoming budget, clarity of thought behind how to give traditional industries a boost can go a long way in supporting the artisans, generational skills of artisans and the slow fashion industry movement. Policies that allow the handloom and handicrafts sector to keep the prices low will give them an edge over the not so thoughtful fast fashion movement and in turn help attract more and more businesses. This will directly impact the sustainable fashion movement which is gradually gaining popularity and momentum in the country.
The textile industry is a major power consumer. To encourage the use of renewable energy, the government must encourage and incentivize investment in green energy and environmentally friendly technologies by providing tax breaks to manufacturers.
Shreya Mehra, Founder, Aab Label