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Hanging by a thread: Gujarat’s textile industry -AM Jigeesh

-The Hindu

Textile traders and cotton farmers say they’re suffering unprecedented losses. For a State half whose population is linked to textiles, such a crisis could have far-reaching consequences. With the Assembly polls scheduled in Gujarat later this year,  A.M. Jigeesh explores whether this financial adversity could have political repercussions

Hours after the Goods and Services Tax (GST) was launched at a midnight gala on June 30, 2017, a 38-year-old textile trader, Hitesh Sanklecha from Surat, started an indefinite fast against it.

During his protest, which lasted a total of 17 days, Mr. Sanklecha was backed by nearly 65,000 Surat-based traders, all of whom anticipated losses in their businesses after the introduction of the GST. During this period, he was able to organise a rally of two lakh people in Surat and 1.5 lakh in Ahmedabad. Anger was also brewing among the cotton farmers due to their falling incomes.

The contention of Mr. Sanklecha, and those who supported him, was that the introduction of the GST on garments — 5% on goods below 1,000 and 12% on goods above 1,000 — would push the trade away from the State to markets in Bangladesh and Vietnam that were offering attractive tax sops to garment manufacturers.

Exactly five years since the imposition of GST, Mr. Sanklecha says his worst fears about the tax driving the garment manufacturing business out of Gujarat have come true. Not only that, he adds, the entire textile industry has been crippled by rising input costs, falling production and a slump in demand due to several factors such as COVID-19 and the ongoing war in Ukraine.

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