While it may have played a crucial role in helping the ruling Bharatiya Janata Party (BJP) win the recently concluded Assembly elections in Gujarat, the Surat-based textile industry is still reeling under the goods and services tax (GST) impact.
According to industry sources, especially in weaving and trading, capacity utilisation at most of the power looms and trading units is still down by 50 per cent or lesser. While spinning units are finding takers in the knitting industry — which is currently doing better due to the winter season — the other verticals in the textile chain, such as weaving and trading, are still finding business unsustainable, especially among smaller players.
Against 40 million metres per day of production in the Rs 500-billion synthetic textile hub of Surat, the current production is down to 2.5 million metres per day. Similarly in the weaving sector, against a Rs 600-million daily turnover in the pre-GST era, the same is still down by 50 per cent, said Ashish Gujarati, president of Pandesara Weavers’ Association.
Moreover, power looms continue to shut shops, with roughly 250-300 looms being discarded as scrap daily, albeit at a slower pace than in October.
Further, there are still several traders and weavers who are yet to register and come under the tax net.
“Smaller traders are still hit. The matter is not just about the 5 per cent GST the traders have to pay, it is about the additional costs of hiring accountants and investing in technology that is hitting the smaller traders’ pockets. This has led to a 50 per cent decline in business,” said Hitesh Sanklecha, one of the traders leading the demands on changes in GST in the Surat textile trading industry.
In normal circumstances, there are 650,000 power looms, 150-200 wholesale textile markets, 20,000 manufacturers — including 10,000 weavers, 75,000 traders, 450 processing units — and 50,000-60,000 embroidery machines in the Rs 500-billion synthetic textile hub of Surat.