Amit Mitra urges PM to call GST meet to reverse tax hike on textiles

Former WB finance minister pointed out fact that the cotton industry is under huge inflation and the tax hike would have a great consequence with the same. Thereby he urged the Centre to call for an urgent meeting to reverse the hike in tax on man-made fibre textiles.

Kolkata: Former West Bengal finance minister and currently advisor to the state's Chief Minister, Amit Mitra on Sunday urged Prime Minister Narendra Modi to convene an urgent meeting of the GST Council to reverse a hike in tax on man-made fibre textiles.

The union government had notified an increase in GST on natural fibre products from 5 percent to 12 percent, including apparels in the lower tax bracket with effect from January 1, 2022.

In a tweet, Mitra said, "Modi Govt will commit another blunder on Jan 1. By raising GST on (man-made) Textiles (from) 5 percent to 12 percent, 15 million jobs will be lost and 1 lakh units will close. Modi ji, call a GST Council meeting now and reverse the decision before the sword of Damocles falls on the head of millions of people."

The former finance minister on December 24 at a media meet had urged the Union Finance Minister Nirmala Sitharaman to similarly convene an urgent meeting of the GST Council to rescind the seven percent tax hike in GST on the textiles sector to prevent job loss and closure of small units.

"If the tax (hike) is not reversed then the impact will be huge with job loss to 15 lakh (1.5 million) people, including those engaged in ancillary industry and closure of one lakh small units. A lot of units will revert to the informal sector, Mitra had told reporters during the meet.

However in his tweet put out on Sunday the job loss figure was placed at 15 million. The total number of jobs in India's textile sector is placed at 45 million by the India Brand Equity Foundation a trust founded by the Ministry of Commerce and Industry.

Mitra had pointed out that the textile trade's natural fibre segment constitutes 80 percent of the Rs 5.4 lakh crore sector and its net profit margin is between one and three percent making it vulnerable to any kind of cost increase.

The cotton sector is already reeling under 70 percent inflation, he had claimed, adding that the government estimate of earning an additional Rs 7,000 crore from raising the tax is mythical as a lot of units may shut down as a direct consequence of the tax hike.

He had accused the Centre of not discussing the issue in the GST council before announcing the hike.

PTI