From nil taxes, Surat’s textile industry is subject to 5-12 percent GST
It is 12 noon at the Surat textile market. All roads leading to the area are packed. There is not an inch of space left in the area to walk. Just two years ago, in July 2017, when the Goods and Services Tax (GST) was launched in the country, this community was the most hit. In 2019, the business is still not back to normal, but traders are cautiously optimistic.
“Business was down by almost 50 percent till last year. Earlier we used to earn about Rs 50-60 crore on a daily business. Now it has dropped to less than Rs 40 crore. But, we are hoping it is for the better,” said Ramniklal Ahuja, a textile store owner in the Surat textile mill area. However, he said that since the end of 2018, business is ‘almost’ back to normal.
An industry, that earlier did not pay any taxes, 5 percent (12 percent for certain categories) GST came in as a rude shock for textile traders. Costs automatically went up as apart from paying taxes, the traders also had to hire trained accountants to manage the revenue accounts.
“We handled large cash-transactions earlier. This had to be computerised within three weeks and it was a nightmare for the first few months. But, we recovered slowly,” said Ravikant Patel, a trader engaged in the textile business for 45 years.
Be it the Surat textile market, Abhinandan textile market or Millenium textile market, all the shop-floor area is packed. There is not an inch of space left in the narrow alleys even as new stores are being added every few months.
“Competition is aggressive as a few traders have decided to also sell their products online. This is against the spirit of the business,” said a miffed Akram who has seen a 25 percent drop in business after e-transactions were mandated.
He also added that cheques take days to clear and they work on pre-order on bulk basis. Hence, without sufficient cash, it is also difficult to pay the workers who are readily poached by the other mills in the region.
Surat is referred to as the country’s textile capital with a revenue size of Rs 50,000 crore. Both raw fabric and finished goods are manufactured in the region.
But, when it comes to the Lok Sabha Elections 2019, all the traders show a guarded approach.
The association has barred them from stating their political affiliations for the fear of retaliation. On the other hand, traders are also wary of new entrants and their lack of knowledge of local issues.
“While we have faced pain, we hope that it will fade away in the next few months. A party change may not always mean good news for us, since we will be required to start from scratch if there is a tweak in the industrial policies,” said an association member.
The industry in Surat is involved in the activities of yarn, weaving, and processing of fabrics. At least 40 percent of the goods are exported to international markets.