Malegaon traders want both suppliers, customers to come under GST

The industrial hub Malegaon traders although equally concerned over GST but are remarkably quiet and waiting to see if the textile industry in Surat, their counterparts who has been up in arms over GST can extract some concessions. Malegaon is ready to accept and endorse the new tax regime but want both its suppliers and customers must also come under GST.

Though trade has diminished, astute businessmen had stocked up in advance, knowing supplies would suffer if there was any glitch in the long chain of textiles trade that involves Coimbatore, Surat, Jaipur and markets as far as Kolkata. Malegaon produces low-cost fabric that competes with China.

Traders are still seeking clarification but there have not been any strikes to avoid antagonising the government. Kailash Mehta, president, Grey Cloth Traders Association (Malegaon), has been busy with buyers from various towns of Rajasthan. They are ready to get a GST number, provided their buyers and suppliers take it too, said Mehta, while others said that they still didn’t have enough clarity on the tax.

On the other end, Ansari Khurshid Ahmed, president, Malegaon Industrial Management Association said that they don’t know who will pay GST on yarn, adding that with clarity, they would try to help small weavers form groups to register for GST.

Government tax officials said that there is phenomenal scope for revenue collection from the hub, which has heavy cash dealings and where a lot of old currency was traded with the help of advance orders in their books after demonetisation.

Upendra Mehta, a leading CA in Malegaon, said that it was a natural apprehension for a new law and there was nothing to fear. However, other CAs say costs of compliance will surely go up for small players to begin with, though there will be benefits in the long run.

Barring large, organised composite units, hardly anyone has taken a GST number. They are hoping the government remove the tax on fabric in response to strikes by powerful traders in Surat. Surat’s predominantly unorganised sector — involving 70,000 manufacturers and nearly 15 lakh workers — has refused to register under GST and is losing Rs 125 crore a day.

The sector is largely unorganised and making organised ones accountable for their suppliers is near impossible, noted a dye maker from Surat, which produces 4 crore metres of synthetic fabric a day.

Devkishan Manghani, representing the GST Sangharsh Samiti under the umbrella of Federation of Surat Textile Traders Association that has called for an indefinite strike, said that GST will tax intermediaries — from yarn (18%) to 5% across grey fabric makers, to weavers, dyers, printers, embroidery units, lace/handwork units — making the entire chain tax heavy. While for a composite unit, this would be a blessing, for smaller disintegrated units, this would be cumbersome.

According to a consultant with an integrated textile player , although GST would make the whole value chain compliant and force them to go digital, it would increase paperwork .