Centre set to defer GST hike on textiles ahead of Vibrant Gujarat summit

CM, others lobbied against hike that would have adversely affected Surat’s textile industry

Ahead of the Vibrant Gujarat summit, the State’s flagship biennial event, the Centre yielded to Gujarat’s demand for a deferment of the hike on Goods and Services Tax (GST) on textiles from 5% to 12% from January 1.

The Centre was going to raise the GST on textiles, of which Gujarat is a hub, from January 1, but it decided to defer the move after State Chief Minister Bhupendra Patel; party chief and Navsari MP C. R. Paatil; and Surat MP and Minister of State for Textiles Darshna Jardosh swung into action, persuading Finance Minister Nirmala Sitharaman from going ahead with the tax hike.

Originally, the GST Council had on September 17 decided to correct the inverted duty structure in the textile sector and decided that a 12% uniform GST rate will be applied on textile products, including readymade garments, except cotton.

The decision was put on hold in accordance with an announcement made by Ms. Sitharaman on December 31, after the Gujarat CM and others lobbied against the move which, they contended, would have adversely affected Surat’s textile industry.

Congress spokesperson Pawan Khera on Saturday said that the decision to hike the tax was deferred due to the ruling Bharatiya Janata Party’s (BJP) fears over a defeat in the Gujarat Assembly polls later this year.

According to sources, the Government of Gujarat contended that raising the tax would not only fuel already rising inflation but would also adversely affect industries engaged in textiles and readymade garments in Surat and other places.

Textile dealers and traders had threatened to launch an indefinite strike against the hike in Surat, India’s largest hub for textiles.

Any strike or protests by traders and businessmen ahead of the Vibrant Gujarat summit to be held from January 10-12 and to be inaugurated by the Prime Minister himself would have created a “negative image”, and thus the top functionaries of the State and the ruling party ensured that the move was deferred, sources said.

The State government on Friday said that the heads of state of five nations, including the Prime Ministers of Russia, Mauritius, Nepal and Slovenia, and the President of Mozambique, would attend the Vibrant Gujarat summit in which as many as 26 nations will be “partner countries”, the highest number since the event began in 2003.

In a press release on Friday, the Gujarat government said that the heads of state scheduled to attend the summit, amid rising COVID-19 cases, include Russian PM Mikhail Mishustin, Mozambique President Filipe Jacinto Nyusi, Mauritius PM Pravind Jugnauth, Nepal PM Sher Bahadur Deuba and Slovenian PM Janez Jansa.

Top business tycoons and the CEOs of dozens of multinational companies have also confirmed their participation during the three-day event in State capital Gandhinagar.

A statement issued by the State government quoted Chief Minister Bhupendra Patel as saying: “We have confirmed participation from 15 foreign ministers, four foreign governors and heads of States alike, and the CEOs from global brands. The VGGS [Vibrant Gujarat Global Summit] 2022 will set new benchmarks for all stakeholders.”

The State government has also contended that organising the summit to attract investments is also important even though Gujarat is witnessing a steady rise in COVID-19 cases.

Earlier, Gujarat’s Health Minister Rushikesh Patel said that all precautions would be taken to ensure that COVID-19 protocols and norms were being adhered to during the event.

The State government has also sought exemption from the Centre on the mandatory quarantine period for foreign guests and delegates who would be attending in the event.

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