Impact of GST on Exports of Handmade Carpets and other floor coverings

New Delhi:As per the feedback received from the President/ Hony. Secretary of Carpet Manufacturers and Exporters Associations  –  All India Carpet Manufacturers Association, Bhadohi,  Eastern U.P. Exporters Association, Varanasi, Agra Carpet Manufacturers Association, Agra,  Rajasthan Carpet Manufacturers and Exporters Association, Jaipur,  Panipat Carpet Manufacturers Association, Panipat, Indian Floor Covering Exporters Association, Delhi Exporters Association, Kashmir Chamber of Commerce & Industry, Kashmir Handicrafts Manufacturers & Exporters Association – the Exports of Handmade Carpets and other floor coverings has affected badly due to imposition of 18% GST on Job Works and 12% GST on Sale/ Purchase on these items consequent upon implementation of Goods and Service Tax (GST) from 1st July, 2017.

 The main impact are as under : 

 Almost 5000 Units has been inoperative and are on the verge of closure. Most of these micro and small enterprises are spread all across the carpet weaving belts.

 As per estimates the exports of around Rs. 1000 Crores have suffered on account of closure of these production units. No new orders are being executed and the weaving has almost come to a complete closure for new orders. The old orders and old stock is also not moving out of fear of imposition of tax, not getting increased price from buyer’s due to old contracts and worry on losing money.

 Indian Carpets loosing its competitiveness and sheen in the International Market. Other countries like China and Turkey set to benefit and fill the space left by the Indian handmade carpets. And machine-made carpets will quickly fill the lower end of the market and will be imported heavily in India and will add to the imbalance in the foreign exchange and balance of payment.

 Export Orders worth Rs. 2,000 Crores have been cancelled as importers refused to incremental cost as world market on luxury goods continues to struggle.

 This has affected the livelihood of around 20 lakhs of workers and their families in the Carpet producing belts viz; Bhadohi, Mirzapur, Varanasi, Ghosia, Aurai, Agra, Sonbhadra, Saharanpur, Sahajanpur, Jaunpur etc. in U.P., Jaipur, Tonk, Bikaner etc. in Rajasthan, Panipat, Sonepat, Karnal in Haryana, Baramullah, Pandipur, Anantnag, Badgam, Leh, Pulwama, Kupwara, Pattan, Kanihama, Srinagar etc. in J&K, etc. etc.

 India which is currently holding No. 1 position in the World Market in area and dollar terms both, will lose its present position to other competing countries like China, Iran, Turkey, Pakistan and Nepal.

The Chairman, Carpet Export Promotion Council (CEPC), Sh. Mahavir Sharma aka Raja Sharma is very optimistic of the government coming to the rescue of the 20 lakhs plus weavers in far flung rural areas of UP and Rajasthan and also that of all small and medium manufacturers and exporters across various cities in UP, J&K, Haryana and Rajasthan. He, along with his board of directors at the CEPC, has been trying very hard to lobby and convince the GST council and all its members.

He is hopeful that the GST on job work in carpet weaving like khadi will be brought down to 0%, as this is the only rural employment provider which 100% hand work and provides the much-needed extra income to formers in times of drought, floods or in between crops. Also, small traders and subcontractors will benefit if the GST on carpets was also brought down to 5% from 12%.

The entire carpet fraternity across India, while supporting the new GST law, is hoping that the handmade carpet weaving and sales would be given a special lower rate to support rural craft based industry. The entire inustry is keeping a silent march in support of its 20 lakhs plus weaving community on the 19th of July across all cities like Bhadohi, Jaipur, Srinagar, Panipat and Agra. Thousands of manufactures and exporters led by industry stalwarts and leaders participated in the silent march.