The twin measures of demonetisation and Goods and Services Tax have dealt a blow to trade in Gujarat, particularly to the jewellery and textile industries. The textile business is down by 20% to 40%, a hit which smaller traders are finding difficult to bear. Many in the business are angry, primarily because textile was earlier exempt from taxes—now it has a 5% tax—and then there is the additional burden of GST filing. Complaints abound about the GSTN site not working properly, wasting traders’ time and making them incur additional expenditure in hiring accountants to file GST. Those in the jewellery business had participated in a 42-day-long protest after demonetisation. However, the government’s move to bring gems and jewellery under 3% GST, even lower than the 5% band, has soothed tempers to a large extent. The realisation has also hit home that Prime Minister Narendra Modi knows the inside out of how business—both textile, and gems and jewellery—is done in Gujarat and is serious about “mainstreaming” at least 50%-60% of the trade, which runs into thousands of crores. The current tension is primarily emerging from a situation where PM Modi is trying to discipline these sectors, and a large section of traders unwilling to give up old ways of doing business. Ironically, from talking to a cross-section of traders what emerges is that these people, however angry, also realise that Modi is their man in Delhi, and they want him there. In Ahmedabad, one keeps hearing, “Modi not being PM will be bad for the country.” Congress is not an option for most, even though some may break ranks and shift towards the “grand old party” in the Assembly elections. The common refrain in the state is that “we are not against the (Central) government, we are against its policies”. From within the trading community itself attempts are being made to assuage the concerns of the smaller traders, with the assurance that mainstreaming their businesses will help them get out of the clutches of corrupt taxmen and other bureaucrats. Whether or not this works, will become clear only on 18 December, when the election results are declared. However, there is also general concern that the government is moving too fast. “It must go slow,” is another common refrain. Here are some of the voices of those who have immense hold on Gujarat’s business landscape:
ASHISH H. JHAVERI
Media Convenor of Ahmedabad Vepari Mahajan
There is no denying that traders faced some problems after demonetisation. Businesses came to a halt during demonetisation. But then if some renovation has to be done, some problems have to be faced for the country. Businessmen too have to sacrifice a bit, like everyone else. And PM Modi has been saying that if you want to do business with imandaari (integrity), then you have nothing to worry about.
After that GST came, which hit businesses to an extent, but businessmen are gradually understanding what GST is. The problem with the textile business is that earlier there was no tax. But it’s a good government. It’s listening to us, and after listening to us it is trying to make amends. And that matters. We are calling traders’ meetings on these issues—not just because this is election time; after all, whatever is done with GST will affect the whole country. Whenever the GST Council holds meetings, they keep changing rates, which is directed at helping the traders. Earlier governments were not even thinking about these things (GST, etc). The government is listening to us and that matters.
President of Panchkuan textile market
In all the 70 years the country has been independent, textile did not have tax. And suddenly GST came. Textile traders did not understand what GST was. There was a strike because of which the market was closed for a long time, not so much in Ahmedabad, but in Surat. Some of us got the traders together and tried to make them understand about GST—that the tax is not really on you, but you are taking the tax from the consumer and giving it to the government. The problem is that those in this business are not very computer literate. They are running their family businesses (in a traditional manner). And GST is all online and computerized. And then there was this rumour that FIRs would be lodged. People would be sent to jail, so there was an atmosphere of fear. So we went right up to Delhi, to tell them that do something to ease the situation. As problems started mounting, we told the traders that you will have to come under GST. GST is for the country and it will help you too. Gradually, the traders are understanding. The problem right now is the GSTN (online filing of GST). Until all the glitches are sorted, we want some exemptions in the form of filing GST every three months, instead of every month. We don’t have any problem paying taxes, but the problem is in filing returns so often. In the last GST Council meeting, they made filing returns every three months for businesses worth up to Rs 2 crores. But in the textile business, a minimum of Rs 10 crore turnover is common. The traders are ready to support the government, but the government too needs to understand the traders’ problems.
President, Maskati Mahajan, New Cloth Market; Committee Member of CAIT; Gujarat Chamber of Commerce
We too rallied against GST. We too got one lakh people in our rally. All of us mahajans even met the Prime Minister. And now they are changing GST (rules) gradually. But there is need to make more changes, for example our demand for filing returns every three months should be met. Then for instance, take the case of the need to import (textile) machines from abroad. An IGST of 18% was imposed on these. When we complained, then they reverted to the earlier system in October. But those who filed IGST for two-three months, they should be refunded, for which the law will have to modified. So all this needs to be done. Until all this work is done, there will be opposition from traders.
But Prime Minister Narendra Modi knows all this, he understands all this, he keeps meeting the (traders’) associations and chambers of commerce, so I am hopeful that he will sort out the problems. We mailed Narendra Modi and he gave us an appointment in four days. We met him in Ahmedabad. We gave everything to him in writing. He talked about how GST was also about consensus (in the GST Council). We suggested that wherever there were problems, he should use his majority to make changes. We had our meeting and soon after changes were made in GST rates. He understood.
Mistakes have been made in the GST structure. But they (government) are ready to listen, they are ready to make changes if the demands are reasonable. They are open-minded about it, they are open to suggestions. But 2019 is coming, the government cannot afford to be late in reforming GST further. It should not get late.