the after effects of gst, the implementation of which caused business to slow down in the last two months, are beginning to show. export houses, fabric manufacturing companies, job workers, accessory and machine suppliers- all were busy in changing and understanding the systems implemented.
Orders were stuck and purchase orders remained on hold; confusion engulfed the minds of all industry players as they strove to find the best way out of this problem. The transition phase is definitely challenging, although everyone is hoping for a bright future and an efficiently organised mode of business. in this issue, we have analysed exports to the u.s. in 2017 June as compared to last year which shows india coming after indonesia with a 4.52% share in the u.s. market with exports worth usd 1999.75mn till June 2017. india’s volume of exports to the u.s. saw a decline of around 8.61%. in fact, except for indonesia and Vietnam, all countries saw a drop in export volume to the u.s. this indicates a shift in the sourcing pattern of the u.s., which is actually moving towards countries with Ftas, better accessibility and prices. the trump effect is also evident as the u.s. could well be reducing its dependence on China for sourcing. in our face2face section, we met with ir accessories, a company that, after carving a niche in accessories like scarves, has got into manufacturing of garments and has set up a large unit for digital printing.
You will also read about the impact of gst on india’s biggest centre for manufacturing man-made fabrics, surat. the hub has been facing several problems due to gst. traders fear that gst, with its emphasis on formalising business by making them register for a gst number–thereby introducing transparency and widening the tax net– will lead to business going to larger and better organised traders. an interesting turn up for the industry was seen when the gst council announced the reduction of gst on cotton-based fabric to 5% from the initially proposed 18%. garment manufacturers have welcomed the government’s decision to cut service tax (goods and services or gst levy) on third-party services, commonly known as job work. this rate of 5% will be applicable for job work in apparel, shawls and carpets.
We are yet to see what gst brings in the long run and its impact on the growth of the textile industry. However, at the moment, things are tough and it is difficult to say when matters will settle down.