GST increase will deal death blow to handloom sector: KTR to Centre

Hyderabad: Industries and IT minister KT Rama Rao has appealed to the Centre to withdraw the proposal of increasing Goods and Services Tax (GST) on the textile and handloom sector.

The Centre proposes to increase GST from five to 12 percent with effect from January 1, 2022.

In a letter to Union Textiles Minister Piyush Goyal, KTR said textile, especially the handloom sector, was badly hit due to the Covid-19 pandemic, and enhancing the tax at this juncture would deal a deathblow to the industry.

"At this juncture, revising the GST from the current 5 percent to 12 percent would only be a death blow to the industry," he said in the letter.

Pointing out that after agriculture, textiles, and handlooms provide the highest employment in the country, he said considering the current scenario, the need of the hour is to extend additional incentives to the sector.

"The decision to increase GST on textiles and handlooms is not wise,"

The minister expressed concern over the plight of weavers who he said were worried over the Centre's proposed tax hike. "Telangana is producing world-class handloom. Almost 80 percent of the units are in the MSME segment. Never in the country's history were taxes levied on handlooms and the Centre's moves to levy 5 percent tax itself was strongly opposed by the textiles and handlooms sector across the country," he said.

KTR said the decision to impose an additional seven percent GST on handlooms would leave the sector crippled. "Telangana produces world-class handlooms and weavers are a worried lot to the Centre's decision to increase GST," he said.

The minister reminded the union minister of the "vocal for handmade" slogan coined by the textile ministry last year while commemorating National Handloom Day. "It fixed the target of handloom production at Rs 1.25 lakh crore and exports at Rs 10,000 crore," he said.