Change in tax structure, VAT in UAE hit Gujarat textile industry, 40% dip in pre-festival business

By: | Published: October 20, 2018 2:29 AM

textile, gujarat, diwaliAccording to the GGMA, there are over 5,000 garment manufacturers in Gujarat and due to the reduction in demand in recent time, many producers have cut the production by 40%.

Diwali may be lacklustre this year for Gujarat’s textile and garment manufacturers as the pre-festival business has gone down by about 40-50% on account of lower purchasing power, disturbed payment systems and weak exports.

“Usually, traders and retailers place orders two months before Diwali and garment manufacturers dispatch orders by Dusshera. But this year we have observed about 30-35% lower booking for upcoming festivals. Fall in purchasing power of consumers and cheap imports from Bangladesh in a big way are the main reasons for current scenario in the Gujarat garment industry,” said Vijay Purohit, president of the Gujarat Garment Manufacturers Association (GGMA).

According to the GGMA, there are over 5,000 garment manufacturers in Gujarat and due to the reduction in demand in recent time, many producers have cut the production by 40%. Dubai is the leading buyers of gents’ ready-made garments but due to change in tax structure, exports to Dubai also affected drastically.

Purohit said, “Garment manufacturers have cut down the production by 40% due to fall in festival business in recent times. Moreover, exports have also reduced due to value added tax (VAT) in Dubai which is one of the biggest buyers of ready-made garments.”

The situation is not different in Surat textile markets as they have also witnessed about 40-50% fall in pre-festival demand this year. According to the Federation of Surat Textile Traders Association (FOSTTA), changes in government policies like the goods and services tax (GST) and demonetisation have affected the payment cycle of the industry and because of this, overall businesses have gone down.

Manoj Agarwal, president of FOSTTA said, “Demonetisation has disturbed the payment cycle of textile industry and it has yet not fully come out from it. On the other side implementation of GST also affected the trade in Surat. All these factors have affected the pre-diwali business by 40-50% this year. Not just textile but affiliated industries are also affected and we are not seeing any revival in near future.”

Moreover, since the demonetisaion and GST implementation markets have not settled and current weak business is the continuation of that. Gaurang Bhagat, president of Maskati Cloth Market Mahajan said, “Current weak demand in pre-diwali business is the continuation of GST and demonetisation. Money crisis is also there and for the consumers, buying cloths or textile products is last in priority list.”

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