City’s rubber footwear industry in doldrums

Aakanksha N Bhardwaj

Tribune News Service

Jalandhar, November 7

Rubber footwear industry, which was already grappling with various issues, has faced a major setback with the implementation of the Goods and Services Tax (GST). Adding to their woes is another fact that manufacturers have been facing issues in getting GST refunds.

Punjab’s rubber industry is concentrated in Jalandhar which had over 300 units of rubber footwear industry. These have now been reduced to around 100, as per members of the Rubber Footwear Manufacturer Association.

Neeraj Arora, president of the association, said non-refund of VAT and GST on rubber have jeopardised the future of industrialists as they were facing a huge shortage of working capital.

The members have written to every minister and officials of the Industry Department at local, state and central level.

The major problem which has come with the GST for the manufacturers is the difference in rate of the GST on various raw material and finished goods.

“Dues of rubber footwear manufacturers in Jalandhar alone are above Rs 50 crore,” the association has written in the memorandum.

The president said it had been over a year of the GST implementation. But the refund of VAT of the previous tax regime were still pending.

“The industrialists are facing problems in running their enterprises. We have already exhausted our bank capital,” the president has written to the officials.

The major problem which has come with the GST for the manufacturers is the difference in the rate of the GST on various raw materials and the finished goods.

This difference of rates in the GST on raw material and finished goods is troubling the manufactures and drying up their working capital, thus making almost impossible for them to continue manufacturing.

The GST on raw materials such as raw rubber is 5 per cent, on strap and soles, it is 18 per cent and on chemicals 18 per cent, but on finished goods such as rubber footwear, it is only 5 per cent.

Explaining about the issue, the manufacturers said for example they were supposed to pay Rs 113 on purchase of raw material and get only Rs 105 on sale of their product. Hence, the difference of around 8 per cent of the GST had to be refunded to them by the government.

The manufacturers said sometimes they were not provided the required refund on time, and in such cases, they had to lose all working capital in only 12-13 transactions. Here lies the actual problem. There is no second option.

The manufacturers said they had been waiting for the Central Government to listen to their demands so that the industry, which was dying a slow death, gets revived.