Units of processing job work deprived of declared 2.5 per cent GST benefit

- Antenna: Vivek Mehta

- Troubled by the deductible margin of 2000 process houses in Ahmedabad-Surat doing job work: Weaving-Technical Textiles લાભ Benefit for 15 years

The age-old problem of Gujarat's textile industry is not solved. Under the Gujarat government's textile policy, 2.5 per cent receivable benefit of state GST on job work of cotton processing is not available to 1000 process houses in Surat besides 1000 in Ahmedabad. It has been demanded for years that this benefit be continued. But as no concrete steps have been taken on this issue yet, Deputy Chief Minister Nitin Patel last week took action against the owners of Gujarat's process houses and weaving units. It was decided to give the benefit of 2.5 per cent SGST to the process house which is eligible in the textile policy of Gujarat government. However, this decision was made in the VAT time policy and it was guaranteed to provide benefits even when SGST is implemented. But the process house has so far been deprived of this benefit. Therefore, a written representation has been made to the Deputy Chief Minister by the Gujarat Chamber demanding the continuation of this benefit. A process house employs an average of 400 to 500 people on an average.

Cotton manufacturing under the textile policy, and manufacturing units under the rules approved for technical textiles are eligible for this benefit. They are also given a certificate of eligibility for benefits. But jobwork-cotton processing has been left out of it. It has been ruled out as a non-manufacturing activity. 60 to 70% of process houses in Gujarat do not do their work. They spend more on job work.

The written submission made by the Gujarat Chamber states that cotton processing is a very important part of the manufacturing process. Processing works to convert gray fabrics into clothing. Gray fabrics through cotton processing give it color, form and design making it suitable for sale. Fashion garments are made not from gray fabrics, but from processed fabrics.

Process House has also invested heavily in purchasing state-of-the-art machinery for this. This increases the production capacity to more than 2.5 lakh meters per month. A process house employs an average of 400 to 500 people. The process house is likely to pass all the standards of manufacturing even though it is more than jobwork. Cotton processing is not eligible for subsidy under the Textile Upgradation Fund if the job work is not considered as a manufacturing activity. But that's not really the case. They are also given all the benefits under the Textile Upgradation Fund.

Naresh Sharma, vice-president, Ahmedabad Textile Processors' Association, says the process house has stopped receiving 4.5 per cent benefit from SGST. And the prices of color chemicals have also gone up. It does not get credit of 2.5 per cent. So their difficulty is increasing. The government should take immediate action to give them this relief.

Units for weaving or technical textile manufacturing have been asked to provide relief for 18 years instead of eight years to offset the loss due to VAT due to GST. After VAT, GST has been demanded to compensate them for the losses incurred. The Gujarat government had also issued a circular on November 2, 2016 assuring the industries to compensate the losses incurred due to GST due to VAT. Only industries with less than 50 per cent GST share during the VAT period were guaranteed the benefit of this new provision. Therefore, their demand is to increase the benefit of GST from 3 years to 15 years. Approximately 30 weaving units in Gujarat are likely to benefit from it.