GST on yarns and cloth textile has led to a drop in business, at a time when power prices stay high
Neerav Makharia has been engaged in the yarns business for over 24 years in Bhilwara, Rajasthan. In July 2017, he was introduced to a new system of taxation called Goods and Services Tax (GST). Within a few days, the entire system had to be computerized and prices of goods went up by 20 percent leading to massive losses.
"We (Bhilwara) produce almost 40-45 percent of the total yarn manufactured in India. But there is a GST of 12 percent on yarn. How will we survive?" he asks.
After GST was introduced, cloth is taxed at 5 percent whereas yarn is taxed at 12 percent. Input credit is also not available to the businesses.
The immediate demand for the Lok Sabha elections 2019 is for GST to have minimal taxes for all raw clothing categories including textile, polyester yarn, wool and other materials. Further, textile traders have also sought tax sops for entities engaged in the business for more than 20 years.
More than 20,000 people are employed in this Rs 700-crore industry in Bhilwara, considered one of the textile hubs of India.
P L Pagaria, general secretary of Ambaji Textile Market Association, said the government should have a uniform 5 percent rate for cloth textiles and yarns.
When one walks around the textile market of Bhilwara, it is a reality that several stores have downed shutters. Traders said many fellow businessmen could not sustain in the textile industry and have now shifted to industries like marbles and granite.
It is an irony that a majority of shops at the erstwhile textile market belong to finance companies and broking houses. Looking at the opportunity presented during the post-GST slowdown, dozens of alternate financing firms have opened up in Bhilwara.
"Businesses were running into losses and banks were not ready to provide loans. Hence players like us have set up an alternate channel to raise funds for the SMEs," said Prakaran Behati, owner of Aashirward Finance.
Though the situation is not very bleak and those seriously in the trade are slowly bouncing back, businesses want assurances from both the centre and the state that their issues will be looked at.
Rajasthan has two phases of polling in the Lok Sabha Elections 2019. Regions like Bhilwara, Ajmer, Jodhpur and Udaipur go into polls on April 29 while others like Jaipur, Alwar and Bikaner will vote on May 6.
"Power supply is a major issue and no subsidies are available. The government should pay heed and give us some discounts because our mills rely heavily on electricity," said Darshan Saraogi of DS Clothing Mills.
At a time when Congress is the ruling party in Rajasthan with Bharatiya Janata Party (BJP) in the centre, a few traders are also of the view that having the same party in the centre and state would mean their concerns would be resolved quickly.Incumbent Subhash Chandra Baheria is contesting from Bhilwara constituency representing BJP while the Congress has fielded Rampal Sharma.