GST-Triggered Issues That Confront the Country’s Textile Sector

Implementation of GST in a country like India is easier said than done. Now GST is a reality. The dust has settled down and some call in a pyrrhic victory. But the GST plant has grown new shoots. Rising imports have been eating into the profit of the SME players. Import barriers have been whittling down. So have the export incentives. Hence the researcher concludes that the government ensure that delays in the release of ROSL are avoided. ROSL disbursements and IGST refunds stifle the capital inflow for the units. The schemes are laudable but their inefficient implementation plays the spoilsport. None can pardon the delay that accompanies the disbursements of ROSL and refunds of IGST. The government should ensure that such delays do not hurt the textile players given that the GST regime has lent more transparency to the sector’s operations. Input tax credit or ITC is available in respect of all the tax paid on capital goods. Hence the units should import state-of-the-art technology to manufacture textile goods. The GST regime has almost done away with the duty drawback system. This will go a long way in promoting the export of textile products.


Introduction 1.1 Theoretical background
GST is a multi-stage tax; theitem concerned changes hands many times as it goes through the supply chain --from manufacture to final sale to the consumer. Typically, the supply chain stages, from manufacture to final sale to the consumer, involve purchase of raw materials, production, warehousing, etc.

Statement of the problem
The consequences of the implementation of the GST regime in India waschaos, pure and simple. Some sectoralplayers who catered to the domestic market alone felt let down while players who catered to the export market were laughing all the way to the bank. One such sector has been the textile sector and given its contribution to the country's economy, the GST regime was required to ensure a level playing field for all the players in the sector. It is this problem that the present study seeks to address.

Review of literature
1. The proposed GST rate structure for the textile industry considers the current effective incidence of tax and tries to eliminate the inefficiencies of the pre-GST structure, while protecting the endcustomer from an abnormal rise in prices (texmin.nic.in, 2017). 2. The Goods & Service Tax or GST was rolled out on July 1st 2017 (News Mobile Business Bureau, 2017).The handloom sector has been one of the worst hit by the new GST regime, more so the weavers, who are the backbone of this major sector of the Indian textile industry.
3. The GST rate on apparels is determined on a category basis, as apparels up to INR 1000 will attract five percent GST while those above this mark will be taxed at 12 percent. (Saurabh, 2017). According to the Apparel Export Promotion Council (AEPC) the positive impact of GST is yet to be felt by the garment industry. 4. Apparel makers and wholesalers highlight that the implementation of the goods and services tax has brought business to a standstill as their unregistered suppliers and customers try to stay out of the ambit of the new tax regime (Soumya, 2017). There are about 25 percent of dealers who do not pay tax at all according to informed sources. About 10-20 percent of the business comes from unregistered dealers, who only want cash deals. What happens to the business if they refuse to comply with GST is anybody's guess?

Research gap
The reviewed literature could have covered the various other thorny issue that the implementation of the GST regime has engendered. It is this gap the present study proposes to bridge.

Scope of the study
The study confines itself to the two major stakeholder categories associated with the textile space, namely, textile businesses and textile industry consultants.

Objectives of the study
The objectives of the study are to identify and analyse the GST-triggered issues that confront the textile sector 1.7 Hypothesis proposed to be tested The study proposes to test the following hypothesis: "Import barriers have been whittling down"

Research design
The following paragraphs explain how the research is designed.

Research methodology
The study is descriptive in nature and uses the 'fact-finding' survey method. Interview schedules specially designed for the purpose were administered to the respondents for collection of primary data.

Sources of data
Data required for the research has been collected from both primary and secondary sources. Primary data has been collected from textile manufacturers and textile industry consultants. Secondary data has been collected from various sources relating to the topic, like articles from the financial press, house journals of industry associations / trade bodies and the websites of the Ministry of Textiles of the government of India 1.8.3 Sampling plan Textile manufacturers: Given the limited number of textile manufacturers operating in the area covered by the study and the limited time at the disposal of the researcher, purposive or judgement sampling under the non-probability method was undertaken. The researcher selected 30 textile manufacturers operating in the area at least for the past 15 years. Textile industry consultants: Given the limited number of such consultants operating in the area covered by the study, purposive or judgement sampling under the non-probability method was used. The researcher selected 30 such consultants operating in the area covered by the study at least for the past 10 years.

Data collection instruments
Interview schedules, specially designed for the purpose, were administered to the respondents for collection of primary data.
The Interview Schedules featured open questions and closed questions.

Data processing and analysis plan
Non-parametric statistical units were used to test the association between some qualitative characters and conclusions were drawn on the basis of formation of H o and H 1 . To be specific, Likert scale and chi-square test were applied to test the hypotheses. 1.8.6 Limitations of the study Primary data has at times been deduced through constant topic-oriented discussions with the respondents. It is possible that a certain degree of subjectivity, albeit negligible, has found its way in. 1.9 Analysis of primary data collected from the 30 textile manufacturer respondents In the following paragraphs, the primary data collected from the 30 textile manufacturer respondents is analysed.

GST-triggered issues that confront the textile sector
There are several GST-triggered issues that confront the textile sector, it is claimed in informed circles. They remain either unresolved or partly resolved. Hence the researcher requested the respondents to disclose such issues as the sector is confronted with. Their replies to the query appear in the following Table-2. Rising imports eat into the profit of the SME players, remind 27 respondents.
Delays in ROSL disbursements and IGST refunds block the capital of the textile players, complain 26 respondents. Import barriers have been whittling down, rue 25 respondents. Delay in refunds to apparel exporters delays procurement of textiles, regret 25 respondents.
Export incentives have been whittling down, assert 24 respondents.

GST-triggered issues Number of respondents
Rising imports eat into the profit of the SME players 27 Delays in ROSL disbursements and IGST refunds block the capital of the textile players 26 Import barriers have been whittling down 25 Delay in refunds to apparel exporters delays procurement of textiles 25 Export incentives have been whittling down 24

Analysis of primary data collected from the 30 textile industry consultants
In the following paragraphs, the primary data collected from the 30 textile industry consultants is analysed.

GST-triggered issues that confront the textile sector
There are several GST-triggered issues that confront the textile sector, it is claimed in informed circles. They remain either unresolved or partly resolved. Hence the researcher requested the respondents to disclose such issues as the sector is confronted with. Their replies to the query appear in the following Rising imports eat into the profit of the SME players 24 Import barriers have been whittling down 22 Export incentives have been whittling down 19

Conclusions
Conclusions are inferences / generalisations drawn from the findings and relate to hypotheses. They are answers to the research questions or the statements of acceptance or rejection of hypotheses. As explained already, this study proposes to test the following hypothesis: "Import barriers have been whittling down" Hence H 0 and H 1 are as follows: H 0 : Import barriers have not been whittling down H 1 : Import barriers have been whittling down On the basis of the primary data collected from the respondents, vide Tables: 1vand 2, a chi-square test was applied to ascertain the association, if any, between the three variables. The Table.3. Reveals the computation made using MS-Excel.

Recommendations
The following are the researcher's recommendations: 1. Delays in ROSL disbursements and IGST refunds stifle the capital inflow for the units. This is a common characteristic that underlies all wellmeaning government schemes. The schemes are laudable but their inefficient implementation plays the spoilsport. None can pardon the delay that accompanies the disbursements of ROSL and refunds of IGST. The government should ensure that such delays do not hurt the textile players given that the GST regime has lent more transparency to the sector's operations. 2. Delays in refunds particularly hurt the apparel exporters since vendors will not supply textiles on credit. In the absence of textiles, one cannot expect the apparel exporters to manufacture apparels, let alone export them! This partly explains the falling apparel exports of the country in volume and value terms. 3. Input tax credit or ITC is available in respect of all the tax paid on capital goods. Hence the units will do well to import state-of-the-art technology to manufacture textile goods. Such imports will no longer be expensive, with ITC being available for all the tax paid on capital goods. 4. The GST regime has almost done away with the duty drawback system. This is because the input tax credit will be provided in the form of a refund. This will go a long way in promoting the export of textile products.