GST problems aplenty for unauthorised textile sector

Arvind Fashions' interest cost for FY20 was Rs 289 crore, while the operating profit for the same fiscal was Rs 231 crore.

The new GST regime will have a heavy bearing on the country's textile sector hard, as a large number of operators in the sector are unauthorised and do not have any proper registration.

Unorganised players constitute over 80 percentage of India's retail market. According to a data by India Brand Equity Foundation the unorganised sector is set to constitute 87 percentage in the retail market by 2019.

The branded firms have a very small presence in India's thriving textile sector. Even in the highly evolved women's apparel segment ,which has seen high growth and heavy value for branded products, they have only a meager share of around 11 percentage as per the data by  Avendus Capital of the last month.

Bulk of those in the unorganised sector lack any proper registration or come under any taxation giving them till now an advantage against registered brands. Many of these institutes lack any adequate registration at all including proper identification papers.

Some experts, however, believe that the problem comes from the reluctance of parties to pay the tax. “One is ignorance on how the GST works, the second is that these businesses are very cash dependent, it is hard to convince them to move on from cash. Also, there are unfounded rumours in the market that there are 37 returns to file," said Anita Rastogi, of tax advisory firm PwC.