Powerloom federation urges GST reduction amid U.S. tariff impact

The Federation of Tamil Nadu Powerloom Associations has urged the Union government to reduce the Goods and Services Tax (GST) on manmade fibre (MMF) from 12% to 5%, citing the adverse impact of the 50% tariff imposed by the United States on the powerloom industry.

In a statement, federation president L.K.M. Suresh highlighted that the powerloom sector provides employment to over 20 lakh weavers across more than 6 lakh looms in Tamil Nadu, and 70 lakh people nationwide. However, the industry is in decline, with many looms being sold as scrap.

The federation expressed appreciation for the Prime Minister’s recent announcement on GST rate cuts and the suspension of the 11% cotton import tax until December. However, it stressed that the U.S. tariff is further damaging the sector and called for export incentives to help mitigate the impact.

Regarding GST, the initial 18% tax on manmade fibre was reduced to 12% following industry requests. However, synthetic fabrics are still subject to a 5% sales tax, and businesses face delays of 3-4 months in receiving the remaining 7% input tax credit. This results in severe financial strain, forcing mills to take loans at high-interest rates, leading to further losses. The federation has thus reiterated its call for a 5% GST on MMF to ease the burden on the sector.