GST REFUNDS BECOME A HURDLE FOR EXPORTERS… IS THE GOVERNMENT RUNNING OUT OF MONEY?
confusion, anger, curiosity and anguish over the new taxation scheme, matters remain in a state of chaos. The industry welcomed GST after a few hiccups and filed all GST returns as required; however, the problem now is getting the IGST refunds, which have been pending for almost a year as of date. While big exporters are still able to handle the situation, the medium and smaller ones are the worst affected. The cash crunch is hitting them hard and they are now anxiously waiting for these refunds to bankroll their business. The industry, as a whole, has been subjected to unprecedented hardship. As per an internal estimate, only 30 percent of the claims for refunds have been met so far. Also, there is a fear that as much as Rs. 1,85,000 cr could get stuck with the Government.
The industry is already facing challenges due to revised duty drawbacks and now the delayed GST has become a major issue, which if not resolved on an urgent basis will cause the regrettably downcast situation of the garment industry to deteriorate. Recent data shows that apparel exports dropped by 0.3 percent between April and December 2017 and eight percent in December alone. This itself is proof of the fact that the situation of apparel exports is not healthy. Exporters have already stopped any further expansion and many have decided to downsize their business.
That said, out of all the negatives there is some good cheer for suppliers. one of the biggest retail chains, THE WAREHOUSE, has started its liaison office in India with an intention to increase sourcing of apparel and home textile products from the country. They see India as an important base for sourcing garments. But they have added a caveat: our industry needs to work quickly on productivity and efficiency, which is where other countries have really improved to our detriment.
In this issue, you will also read about the budget and its inclusions and implications for the apparel and textile sector.
PERFECT SOURCING always tries to bring substantial information about garments not only in India, but also in other countries. In this issue, we have brought you an interesting compilation of labour wages in India vis-a-vis other countries like Bangladesh, vietnam, Cambodia and China. Wages play a very important role in diverting business to a country as it is the key factor in determining the cost of sourcing garments. As per our analysis, India has been raising wages on a regular basis which is why business is moving to other low cost countries; however, it cannot be denied that the labour class in India is suffering even at the existing scale of wages due to high inflation in the country. Even so, among all countries considered, India, Bangladesh, and Indonesia stand strong and have bright prospects in the future as far as sourcing is concerned.
I hope you will enjoy reading the issue.
Wishing you a very happy and colourful Holi in advance
The after-effects of GST have still not calmed down as, even after a lot of