the impact of this move on theindustry over the next year. Another landmark decision, GST, which took more than a decade to be approved by Indian law makers is considered a major economic overhaul to turn the country into one unified market in which businesses can trade goods and services across state lines without having to navigate a prohibitive array of federal and localtaxes. The move is being billed as the most significant reform since India opened up its economy in 1991, as themeasure is aimed at sweeping away a maze of levies that have hampered economic growth by making it harder for businesses to expand nationwide. GST will replace 17 indirect tax levies and compliance costs will fall. While the industry is supportive many doubts are yet to be cleared. Dr. A.Sakthivel, former President – TEA, airing the general view of the export industry said, “The industries and the people will get benefit out of the introduction of GST in the system and atthe same time, there is no doubt, but we request the Government to address any issues arisen in exports furtherto implementation of GST system.� Although there are many riders to its success in various industries, all agree that prices on manufactured goods will go down. Because thetaxes paid at each step of production and distribution are offset by the previous tax payment, the total tax on a good will decrease, lowering the price. The textile industry has 9 broad categories for the purpose oftaxation. The current taxes vary from 4 per cent to 12 per cent based on their categories. Further, textile sector is dominated by unorganized players who are given tax exemptions on the basis of size of their operations. Some of the peculiarities of tax structure in the textile sector include: Differential
taxation for cotton and manmade fibre; Zero duty for cotton fibre as compared to high excise duty structure of nearly 12.5 per cent on manmade fibre segment; and Composite mills are taxed at a higher rate than the powerlooms discouraging integration of production. With the implementation of GST, there will be a uniformrate of tax which will result inelimination of blocked input taxes as GST is a consumptiontax. It is further argued that zero rating on exports under GST will boost exports without the need for explicit subsidy schemes and a level-playing field will be provided to all textile segments leading to integration of production, resulting in increased efficiency. Goods movement within the states will also be much easier as lot of local state taxes which are levied on the borders of states which inhibit free movement of goods will be removed.Experts of the textile industry indicate that GST would certainly help the textile industry to be more organized and synchronized therefore compelling the non-compliant textile players to be a GST-compliant to make sure free flow of credit as well as competitiveness. However, they caution that the proposed 12 per cent GST rate is likely to have a harmful impact on the textile business as the cotton value chain is leviable to nil excise duty. Despite the many questions, the Government is committed to introduce GST by April 2017 and in the meanwhile, discussions and negotiations are underway on how to ensure a fair deal for every industry. According to a survey of corporate India by Feedback Business Consulting Services, which covered 67 companies from various sectors, GST rollout will be positive for the economy and attract more foreign direct investments across sectors due to tax transparency and ease of doingbusiness.