GST dents Diwali biz of Surat textile units, sales decline by 20 per cent
The latest revision in the goods and services tax (GST) rates, announced on October 6, might have come a bit late for the Surat textile industry, say traders.
As against a typical ~10,000-12,000 crore worth of business during Diwali through dispatch of 1,500 trucks daily for a fortnight, this is down to 15-20 per cent, say traders. They say they will decide whether to go on strike on the coming Wednesday, once they resume work after the festival. “This is the first time we are seeing such a Diwali,” Tarachand Kasat of the Surat-based GST Sangharsh Samiti and a leading textile trader told Business Standard.
In the past few years, Surat has been dispatching textile goods through 1,500 trucks daily for this fortnight, worth ~60 lakh each. The impact of GST has led to orders drying this year, especially from north and central India wholesalers this season, “Surat could be sitting on an inventory of at least ~500-800 crore, which is unusual,” said a leading trader, on condition of anonymity.
As a result, “traders have deliberately shunned lighting up their offices across 150 of the total 250 textile markets”, Kasat added.
The powerloom industry, shut for the Diwali vacation, is unsure how many units would resume production. “Many weavers are yet to decide. We might see an extended vacation,” said Nikhil Godiwala, a powerloom owner in Surat.
“The October 6 revision in GST for textiles has not fully addressed the issue in the Surat synthetic textile market. With only 15-20 per cent business this Diwali, this is one of the worst festive seasons one has seen. We will decide on whether to call for a strike or not once the market resumes,” Kasat said.
There are 650,000 powerlooms, 200-odd wholesale textile markets, 20,000 manufacturers, including 10,000 weavers, 75,000 traders, 450 processing units, and 50,00060,000 embroidery machines in the ~50,000-crore synthetic textile hub. Synthetic fabric production in Surat had fallen from 40 million metres a day to 20-25 million metres a day in the first three months of GST rollout.