As the Goods and Services Tax (GST) is about to complete one year in the state, handicrafts artisans, traders and manufactures say the implementation of the new tax regime has dealt a blow to the Kashmir crafts.
People associated with the Kashmir crafts at different levels from manufacturing to exports say the sector is struggling for survival as according to industry estimates, post-GST handicraft exports outside India and domestic sales within the country have witnessed a decline by almost 25 percent compared to last year.
Sheikh Ashiq, member, committee of administration, Carpet Export Promotion Council of India and an exporter says post-GST handicraft exports have witnessed a major decline from almost Rs 1,200 crore worth exports last year has already seen 25 percent decline this year. After being tax free under Value Added Tax (VAT) system, bulk of Kashmir's handicrafts under GST are taxed at 12 percent which is taking a toll on the sector. "This sector is on the verge of a collapse and now GST has plunged the sales," Ashiq said.
Speaking with Greater Kashmir, several people associated with Kashmir handicrafts including carpets, shawls, chain stitch, papiermâché, namda, crewel said roll-back of GST is the only way to offer some hope to dying crafts of the Valley.
"About 2.5 lakh people are directly associated with handicrafts in Kashmir and this taxation has taken a toll on their livelihood. Even the GST council has admitted that new tax has stressed this sector and constituted a fitment committee to work out modalities so that GST on handicrafts could be made zero percent but inability of concerned administrators at helm of affairs in the Valley has not set the ball rolling," said Ashiq.
Ashiq says apart from the high tax rate, the "uncertainty" under GST has lead to a drop in sale, export and simultaneously the production of Kashmir handicrafts. "We even hit the streets demanding zero percent tax rates for handicrafts. Government promised to bring down tax rates but all in vain. Today manufacturers and exporters are desperate to clear old stocks as fresh production has become rare. Sales are drastically down," Ashiq said.
Ashiq says various amendments made by GST council such as setting a pre-condition that only exports, which take place within 90 days of billing would have to shell-out only 0.1 percent tax is "illogical" for Kashmir handicrafts. "Most of Kashmir art inventory takes months and often years to get cleared. This provision is not viable to us as bulk of warehouses are outside Kashmir and goods transfer is time consuming," Ashiq said adding that brining down tax rate from 12 percent to 5 percent for job works such as binding, washing, cleaning of handicrafts has hardly made a difference as "most of these finishing touches to products now-a-days happens in the export market itself."
JavedTenga, president, Kashmir Chamber of Commerce and Industry says making it mandatory for dealers and exporters of handicrafts to shell-out 12 percent GST had hit cost-competiveness of Kashmir art.
"While non-registered dealers with annual turnover of Rs 20 lakhs have been kept out of GST, retailers and exporters are bearing the brunt," Tenga said. Making inter-state transfer of goods for exports attracts 12 percent under IGST that result in Kashmir art becoming costlier, making it unable to compete in global market." Exporters and thousands of showrooms of Kashmir art across India and rest of the world are suffering," says Tenga.
Most of the people associated with handicrafts say being an unorganised sector makes levy of GST on it highly cumbersome. "We are not like the FMCG sector which can be taxed like this. After this year's state budget a task force was constituted which made certain recommendations for revival of handicrafts but it has been only on papers so far. Handicrafts sector had been assured industrial benefits under MSME but to no avail," said ParvezBhat who heads the Artisans' Rehabilitation Forum.
Handicraft exporters say GST has compounded their problems caused by a "considerably dull global market." "Middle East, Russia and Turkey markets are not doing so well for us. GST has broken our back and its roll-back is the only solution," said an exporter.
Most people associated with handicrafts say the sector being the major foreign exchange revenue generating industry needs to be put back on track.