One Year Later: How GST Crushed Surat’s Textile Industry

Surat’s textile industry was shut for 20+ days to protest GST in 2017 – resulting in losses of over Rs 100 crore.

Surat was dubbed ‘Manchester of India’, but today, the once flourishing textile hub is in doldrums. Last year, the textile market across the city remained closed for over 20 days as a mark of protest against GST, resulting in losses upwards of Rs 100 crore in a matter of days.

Today, Surat is still reeling from the effects of GST as many power loom units, jari units and embroidery units that form the backbone of the once fledgling textile hub have shut shop. Even textile traders are severely hit by the new regime as many traders have shrunk their scale of business, owing to GST.

One year down the line, at the cusp of the first anniversary of GST implementation, The Quint walked down the once bustling cloth markets of Surat to see how traders are coping with the tax regime.

My friends who worked with me here are now sitting jobless at home in our village. They ask me whether they should return. I tell them not to. There are no jobs available, there’s no money to go around, no good food to eat, no good clothes to wear – what will they do here? The life of a labourer is hard, but things are impossible to handle right now.

Bhola Singh, 31, Embroidery Worker

I had 38 looms running here and another 115 looms located in another industrial estate. This Diwali, three years would have passed since we saw a profitable Diwali. Today, we are selling our machinery worth lakhs for just Rs 20,000 and the unit owner is not able to break the cycle of loans. We were under the impression that demonetisation followed by GST will ensure ‘white’ business. Earlier, our stock got sold even if we didn’t make profit; but after GST was enforced, our final product is not getting sold and losses are piling on.

Sidhubhai Patel, 43

I’m the president of the All India Jari Federation. The jari industry is 400-500 years old and we employ two to three lakh workers, of which around 70 percent are women. Before GST, our business was thriving; we paid 2 percent sales tax and 0 per cent VAT. But GST levied 12 percent tax on us and it spiked our cost of production. The burden has fallen on the product – sarees made in Kanchipuram and Benaras. Now people are buying fewer sarees and manufacturers are producing far lesser sarees. All this has had a negative impact on our business. Our workers are heavily dependent on us; if the cost of producing jari spikes like this, our workers will starve.

Shantilal Jariwala, 69

I used to run a power loom unit and had borrowed 36 loom machines on loan to run my operations. But the GST regime ruined by business; I had to return all the machines and ended up making losses upwards of Rs 2 lakh. These days I sell tea to make a living and fill my belly.

Nikul Patel, 29

I have been working in this jari manufacturing unit for the last six years. But for the last one year, the business has tanked and finding work has become difficult. Earlier, we used to work long hours in the manufacturing unit, but now we hardly work few days a month. I used to earn Rs 10,000 a month, but these days my salary has dropped to Rs 5,000 a month. What to do? How do I send my children to school? Things have become impossible to manage.

Nehaben Rana, 32

I am a trader at Surat Textile Market, running a proprietorship named Highlight Traders for the last five years. I was employed earlier and then entered a business in partnership with someone, and then ventured out on my own. Two years after I started my proprietorship, demonetisation hit us, followed by GST. Earlier, I did well and made a turnover of Rs 4-5 crore; but after demonetisation and GST, our revenue has dropped by more than half. The paper work has become so cumbersome that even on vacations we have GST and TDS playing on our minds. Instead of putting our mind in business, we are putting our brains on the tax regime. Now the only thought running in everyone’s mind is how to keep the business alive. People used to enjoy doing business here, but these days the fun has been sucked out of our work and everyone feels sad from within.”

Pawan Kumar Chaudhury, 54

I am the treasurer of the Embroidery Units Association of Surat. Our businesses have hit rock bottom since September 2017, two months after GST was implemented. Only 30 percent units are producing, remaining have shut shop. Things are so bad that we are selling our machines for scrap – machines worth Rs 10 lakh are being sold for Rs 2-3 lakh, which is a 70 per cent capital loss. GST has taken cash out of the system; we used to get paid by cash, lest the cheque bounce. But now, we can’t even do that. Surat has two to three lakh embroidery units employing close to a million labourers. Now, nearly 7.5 lakh labourers have returned to their villages in North India.

Rajnibhai Patel, 46

I own a jari unit. I have been following this business closely since the age of 7. My father was in this business earlier and I followed him. In a single month we used to manufacture Rs 2-2.5 lakh worth of produce of Silver Kasab Jari. Now the production has dropped by over 50 percent. The unit and these machines work for a mere 15 days and remain shut all other times. This all because of GST; the tax cost is high, and the demand of our final product has crashed.”

Narendra Champaklal Maharajwala, 62

I own a power loom unit. GST has kicked us so hard that a man like me who had a turnover of Rs 25 lakh per month now only manages Rs 2-3 lakh. Our business was, as it is, in bad shape before demonetisation. We assumed that with GST we will see better days. A year has passed, and things are worse than ever. Our pockets are draining because of GST. Small traders are facing fund insufficiency and our capital is getting wiped out paying off bank loans. I feel that the middle-class is being forced in to the backward class...such are the times. 

Kalpesh Patel, 46