New Delhi: PHD Chamber of Commerce and Industry (PHDCCI) on Tuesday asked the government to rationalise Goods and Services Tax (GST) on textiles.
“The GST on man-made fibre (Polyester Fiber) and its basic raw materials PTA (Purified Terephthalic Acid) and MEG (Mono Ethylene Glycol has been still kept at 18 per cent). The GST on Filament Yarn / Spun Yarn has been reduced to 12 per cent and on all fabrics (Man-made & Cotton) to 5 per cent leading to an inverted duty structure and blocking of working capital. The Government should bring down GST on man-made fibre and their Raw Materials PTA & MEG to 5 per cent,” the industry body said in its pre-budget expectations.
It has recommended rationalizing accumulated ITC on capital goods.
“At present accumulated Input Tax Credit (ITC) on capital goods is not refundable as the definition of ‘Net ITC’ in Rule 89(4) includes ITC on inputs and input services only. Circular No. 18/2017 on capital goods is not refundable. This leads to a huge blockage of the capital of exporters who have invested substantial amounts in capital goods procured from abroad or from within India on payment of IGST / GST. Non-grant refund of ITC on capital goods adds to the cost and makes Indian exports non-competitive,” it said.
PHDCCI has also demanded that the man-made fibre industry from fibre/yarn to garments should be under the ministry.
“MMF Industry is classified under the Department of Chemicals and Petrochemicals, Ministry of Chemicals and Fertilizers as the input materials are Petrochemicals. However, in terms of saleable products, the yarns and fibre are under the Ministry of Textiles. This duality has generally led to confusion and chaos as all our requests are going back and forth. No one in the Ministry of Textile takes an overall view of the problem. Being administered by one Ministry would be helpful for the industry. Needless to add, keeping in view our saleable output, it should be Textile Ministry,” it said.
The chamber has also demanded removal of anti-dumping duty on raw material PTA.
“Availability of basic raw materials at international prices- Anti-dumping Duty (ADD) on Purified Terephthalic Acid (PTA) the main raw material for manufacturing polyesters which was levied in July 2014 has impacted the growth of man-made fibre very badly. There is no Anti-dumping Duty on fibre/yarn and fabric. This anomaly has allowed the import of yarns and fabrics into India at prices lower than domestic prices,” it pointed out.
The Delhi-based industry body has urged the government not to allow Anti-dumping Duty on Mono Ethylene Glycol (MEG).
“Recently, DGTR has sent a notification to start an investigation for putting Anti-dumping Duty (ADD) on MEG. MEG is also a major raw material for the manufacture of Polyester. There has already been Anti-dumping Duty (ADD) imposed on PTA and if ADD is imposed on MEG, the whole polyester (Man-made Fibre) downstream industry could collapse. Consequently, the import of downstream products will increase and export and Man-made fibre-based products will further come down,” it said.