South india coordination committee 31jul17-dnr
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This is a presentation done in a meeting of handloom weaver unions, at South India level, on 31st July, 2017, in Hyderabad
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South india coordination committee 31jul17-dnr
- 1. Goods and Services Tax: Huge Impact on Handloom Sector Dr. D. Narasimha Reddy Public Policy Expert
- 2. Present Situation 0 500000 1000000 1500000 2000000 2500000 Global Market Indian Market Volumes in Rs. Crores Textile and apparel industry in India is Rs.2,20,500 crores Global market is Rs.20,25,000 crores
- 3. Types of Fibres Natural fibres • Cotton • Silk • Jute • Wool Natural fibres • Mesta/ Kenaf (Patsan) • Roselle (Patwa) • Sunhemp (San) • Ramie (Reha) • Sisal • Pineapple • Banana • Palm • Coconut Man-made fibres • Acetate • Nylon • Polyester • Acrylic • Rayon • High modulus Rayon • Spandex Double blends • 65% polyester/ 35% cotton • 70% acrylic/ 30% Avril rayon • 80% cotton/ 20% wool • 80% Acrylic/ 20% cotton • 55% polyester/ 45% rayon
- 4. Global Fibre Consumption Fibre Consumption to increase, with the growth of global textile market 9.2 billion kgs in 1950 62.6 billion kgs in 2008 92.37 billion kgs in 2011
- 5. Indian Fibre Consumption Fibre Consumption to increase, with the growth of domestic and exports textile markets 0. 6 billion kgs, now 1.2 billion kgs in 2012 2.0 billion kgs in 2020
- 9. Cotton Supply Chain • Farming • Ginning • Trading Aggregation • Packaging • Spinning • Trading Disaggregation • Handloom • Mills • Powerlooms • Hosiery Wholesale/Retail
- 10. Conflicting Expectations: Cotton Supply Chain Farmers • Pricing • Cost of production • Risks • Agri-technologies • Cotton Exports Processors • Lower procurement price • Higher market price • Technology • Taxation • Yarn Exports Users (handloom) • Access to yarn • Rising prices • Imitation products • Synthetic/blends fibres • Yarn Exports Users (modern) • Rising prices • Blends • Fabric imports • Export risks • Yarn Exports • Want domestic market control
- 11. Silk Supply Chain • Silk worm seed producers • Farmers/ rearers • Extraction • Trading Aggregation • Twisters • Reelers • Traders Disaggregation • Handloom • Mills • Powerloom s Wholesale/ Retail
- 12. Conflicting Expectations: Silk Supply Chain Fibre Producers • Pricing • Cost of production • Risks • Agri- technologies • Marketing Infrastructure Processors • Decreasing supply • Cost of production • Technology • Taxation Users (handloom) • Access to yarn • Rising prices • Chinese yarn and fabric imports • Artificial silk products Users (modern) • Rising prices • Chinese yarn and fabric imports • Export fluctuations • Want domestic markets
- 13. Conflicting Expectations: Fibre Supply Chains Handloom Weavers Mechanised, automation-based weavers Fibre Producers Fibre Processors Policies
- 14. Fibre Supply Chains: Policy Vaccuum Indian Textile Policy, 2000 Technology Mission on Cotton National Jute Policy No Policy on silk, wool, organic cotton, MMF, etc.
- 15. Fibre Supply Chains: No National Policy • Planning Commission • Ministry of Agriculture • Ministry of Textiles • Ministry of Commerce National Foreign Trade Policy Indian Textile Policy Five year Plans No Policy with fibre focus
- 16. National Textile Sector Strengths Diversity Complete supply chain in all fibres Huge domestic markets Weaknesses Infrastructure support Working Capital Support Rigid practices Asymmetric flow of information Opportunities Small and flexible production Demand for environment- friendly production and consumption Threats Cheap Imports Firm-level policies Wrong subsidies Automated, large textile machinery
- 17. Fibre Supply Chains: No State Policy/ Department • Jute• Cotton • Wool• Silk Sericulture/ Agriculture Dept. Animal Husbandry ??Agriculture
- 18. Existing Indirect Tax Structure 18 Central Levies Customs Duty Service Tax Excise Duty Cess Central Sales Tax Purchase Tax Entertainment Tax Entry Tax & Octroi Luxury Tax VAT State Levies
- 19. Goods Not Covered under GST 5 Petroleum Products • Petrol • Diesel • Petroleum Crude • Aviation fuel • Natural Gas Alcohol for Human Consumption Power Sector
- 20. Taxes Not Likely to be Subsumed under GST Central Taxes: • Customs Duty • Other Customs Duty like anti-dumping duty, Safeguard duty etc., • Export Duty State Taxes: • Road & Passenger Tax • Toll Tax • Property Tax • Electricity Duty • Stamp Duty & Registration Fees
- 22. Features of Constitution Amendment Act  Concurrent jurisdiction for levy & collection of GST by the Centre (CGST) and the States (SGST)  Centre to levy and collect IGST on supplies in the course of inter- State trade or commerce including imports  Compensation for loss of revenue to States for five years  GST on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas & aviation turbine fuel to be levied from a later date on recommendations of Council 22
- 23. Overview of GST Returns GSTR 1 Statement of Outward Supplies GSTR 2 Statement of Inward Supplies GSTR 3 Monthly GST Return GSTR 5 Non-resident taxable persons GSTR 6 Input Service Distributor (ISD) Return GSTR 7 Tax Deduction at Source (TDS) return GSTR 8 Tax Collection at Source (TCS) Return GSTR 11 Inward Supplies for Government Bodies Monthly GSTR 4 Compounding taxpayer Quarterly GSTR 10 Final return after cancellation, within three month of cancellation Unscheduled GSTR 9 Annual GST Return GSTR 9A Annual return for Compounding Taxpayer GSTR 9B Reconciliation Statement Annual
- 25. Report on ‘Implications of Goods and Services Tax (GST) for Indian Textiles Sector’ Recommended policy options for Khadi and Handlooms, Cotton textiles, and carpet weaving • Zero rating • Exemption • Lower rate of tax • Standard rate of tax with appropriate subsidies
- 26. GST Impact on Handloom • Cost burden on production to increase • Handloom products become uncompetitive at retail level • Natural fibre costs to grow • Decreasing access • Market position to shift • GST hassles to discourage investment flows • GST-induced fibre neutral policy discriminates
- 27. GST Impact on Handloom • 18 % burden on small-scale reeling, twisting, winding and other machines will impact silk and wool sectors directly. • 53 returns per year adds to operational costs • Local consumption is discouraged • Transit and services tax burden to be explored
- 28. 4,594.82 0.00 1,000.00 2,000.00 3,000.00 4,000.00 5,000.00 6,000.00 7,000.00 8,000.00 9,000.00 Handloom Allocations Textile Allocations nreddy.donthi16@gmail.com
- 29. Fibre Supply Chains: Policy Vaccuum Indian Textile Policy, 2000 Technology Mission on Cotton National Jute Policy No Policy on silk, wool, organic cotton, MMF, etc.
- 30. Cumulative Impacts • No Indian Textile Policy • No Handloom Policy • Decreasing schemes and budget allocations to handloom sector • Ministry of Textiles orientation to modern, automated textile industry • No thinking on linking Indian textiles with Sustainable Development Goals (SDGs)
- 31. Suggested National Fibre Policy: Bring out a Textile Fiber Products Identification Act Establish a Natural Fibre Fund, to support lakhs of livelihoods Increase the targets for natural fibre and fabric production through environment friendly methods Establish price stability mechanisms
- 32. Thank You Dr. D. Narasimha Reddy E-mail: nreddy.donthi16@gmail.com
Editor's Notes
- 71%: 39%
- 31%: 69%
- 53,000 villages