Patel heartland’s industrial clusters await ‘achhe din’

BUT TRADE WAS HIT ON ACCOUNT OF 28% GST. THE GOVERNING COUNCIL LATER REDUCED THE RATE TO 18%

RAJKOT/MORBI/MEHSANA: For two months post GST implementation, Vishal Gadhiya was forced to shut his cotton sari dyeing and printing unit in Gujarat‘s Rajkot district as orders dried up.

The reason? “The entire supply chain has been taxed 5% at every stage. So Goods and Services Tax (GST) gets built up and passed on to consumers,” he said. When work resumed at the unit in October, business had taken a 50% hit. “There is also confusion about the taxation system so demand is low,” he said.

Gadhiya’s factory is one among the 1,500 small units employing 20,000-odd workers with an annual turnover of ₹2,000 crore. In Rajkot’s Jetpur taluka, primarily an agriculture belt, the cotton sari printing and dyeing industry is nearly four decades old and has been supplying lowcost clothes to domestic and global (Africa) markets. Most of the unit owners had entered the trade to augment farm incomes.

The high GST and the apparent confusion has led to discontent against the ruling BJP, and Gadhiya hopes PM Narendra Modi’s party will “do more to protect small businesses like ours, not just big corporate houses”.

HT spoke to influential leaders in the three business clusters — saree printing and dyeing (textile processing), ceramic tiles, road engineering and agriculture implements — spread across Rajkot and Morbi districts in Saurashtra region and Mehsana in North Gujarat, all dominated by Patidars. to gauge the mood of the industry. Morbi, the ceramic cluster built largely on Patel thrift, is among three of the biggest such manufacturing hubs in the world after China and Italy. It employs over 13 lakh people, and had a turnover of ₹25,000 crore in 2016-17.

But trade was hit on account of 28% GST. The governing council later reduced the rate to 18%, but all tile producers are not happy.

A ceramic tile producer said despite the rate reduction, stockists were not taking their supplies, forcing him to halve production.

“Post demonetisation and now GST, we have suffered. The trust factor with BJP is low,” he said. “Despite government’s efforts, GST implementation hasn’t been smooth. I am paying advance taxes of ₹2 crore and I am not sure when this will be offset,” owner of six ceramic tile factories, Rajubhai Patel, said.

However, others like Vipul Lokhil of Selza Ceramic, believe their industry will see a turnaround due to the rate reduction. “Those who complain have other political agendas. BJP government has been very supportive towards the industry,” he said.