Decision to slash GST on carpets, other handicrafts brings cheer to Kashmiri artisans

28th council meeting announces rate cut from 12% to 5%

Srinagar, Publish Date: Jul 22 2018 1:08AM | Updated Date: Jul 22 2018 1:08AM
Decision to slash GST on carpets, other handicrafts brings cheer to Kashmiri artisansRepresentational Pic

After being at the receiving end since the 2014 floods, there is some cheer for Kashmir’s handicraft sector, especially the local carpet industry as the 28th Goods and Services Tax (GST) council meeting held in New Delhi on Saturday decided to reduce tax rate on various handicrafts items including handmade carpets from existing 12 percent to 5 percent.

According to a statement issued by the Union Finance Ministry, apart from carpets, GST on “wood works” has also been brought down from 12 to 5 percent. This is being seen as a possible boost for the paper machie and walnut wood carving industry of the valley. “Several small handicrafts have been fully exempted from GST,” said the Union finance ministry after the meeting. 

According to local artisans and exporters, exact details of the 28th GST council meeting announcement to make “small handicrafts” GST-free would become more clear only once fine-print of the meeting which concluded on late Saturday evening is released by the finance ministry.  “Although recent PDP-BJP dispensation in the state had made an announcement last year about the tax reduction on carpet but today’s announcement to reduce tax rate is victory of artisan who came out on street against GST. We hope this tax becomes 0 percent for handicrafts as it is a labour driven industry,” said Majid Ahmad, a carpet weaver.

Sheikh Ashiq, member, committee of administration, Carpet Export Promotion Council of India and an exporter says reduction of tax on handmade carpets is a breather for this industry as post-GST carpet exports had witnessed a major decline. Ashiq said local stakeholders are firm on their demand of the roll-back of GST on handmade carpet. “From almost Rs  200- Rs 300 crore worth exports of carpets last year we have already seen 25 percent decline this year. After being tax free under Value Added Tax (VAT) system, bulk of Kashmir’s handicrafts under GST were being taxed at 12 percent which has been taking a toll on the sector. Carpet industry was on the verge of a collapse as GST had plunged the sales. We hope the tax reduction helps to infuse life into this industry,” Ashiq said.

Even as carpet weavers are thrilled with the GST rate cut, they say promises made by the previous government such as formation of clusters in areas where concentration of carpet weavers is large has not been fulfilled. “ There have been recommendations that traditional carpet weaving areas such as Sonawari, various areas in Budgam and carpet weaving localities around Dal Lake in the summer capital would be developed but to no avail,” said an artisan.  

“More than a GST rate cut we need facilities such as setting-up of  carpet production centres, mini clusters in each district in a so that modern infrastructure along with allied facilities, services are available under one roof,” he added.

Carpet weavers in Kashmir have also been demanding that carpets villages be identified in every district to create necessary infrastructure. “Government must identify these villages and provide necessary infrastructures. We were also told that in-order to safeguard the interest of artisans provisions of minimum wage legislation facilitating minimum wage earnings to the level of skilled workers involved in other fields of social activity similar to that of masons/carpenters be enforced so as to save the artisan class against the exploitation but this has not seen light of the day,” said Farooq Ahmad, a carpet weaver. He blamed lack of research and development initiatives resulting in non-production of innovative designs, preferred sizes, aesthetics which adversely affects the sales both at domestic and international markets in view of changing tastes and demands.

Carpet industry has also been demanding marketing support suggesting that marketing practices to be followed in the showcasing of the products in the trade fairs which are held on national and international scale. They said participation in trade fairs is critical, the state, central government should encourage the participation of artisans and manufacturers in such events.

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