Appeal to GST Council: Save the Zipper Industry of India

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Zippers association of India has requested the Chairman of the GST Council to look into some of their demands. These were to Include slide fasteners and parts thereof as a part of Textile Industry, to lower the tariffs on fasteners (tariff item - 9607) to bring it on par with those of common man’s textile items i.e. @ 12% from the existing rate of 18%, to seek personal appointment with the chairman of GST council at the earliest to allow them to appraise him of their concerns.

The need for changes

The demand have been made in the light of problems being faced by the already ailing sector due to the implementation of GST and its impact on the business of slide fasteners and apparel export industries. It is essential that the demands be looked into because of many reasons –

·         Already a sick industry, Zipper manufacturing provides employment to about 1 lac workers mainly women

·         The existing tax rate of 18% is too high and unjust in comparison to that on textile items which is 5% or 12%

·         The sector has been suffering not due to its capabilities but due to inconsistencies in policies

·         The lowering of tariffs will provide the fastener as well as apparel export industry with competitive edge in the existing quota free world

·         Local manufacturing and supply of zippers will shorten delivery time, boost export orders and enhance brand reputation of the garment export industry

·         Assist in retaining and generating employment especially women

·         Minimize loss of turnover and government revenue collections

·         Save many units from closing down (till now almost 27 have closed down since GST came into force. See exhibit – 1 of the letter)

The rationale behind the demand and previous policies
The government policy towards fastener industry has been lacking consistency both in terms of technicality and regulations. Time and again, it has seen many flip flops. The reason for this inconsistency has been the lack of appreciation of its uses and permanency in regulations.

·         Almost 80% of all zippers is used in textile industries and more than 95% of the inputs used as raw materials in their manufacture are textile items, taxed at 12%

·         Zippers are popular in textile industry thanks to them being inexpensive and convenient

·         Empowered committee of finance ministers on VAT in its meeting dated 05th January, 2005 treated them as industrial input of readymade garments industry and levied VAT at the same rate as them

·         Technical advisory and monitoring committee (TAMC) of Technology upgradation fund scheme (TUFS) included zippers under TUFS scheme in their meeting on 9th May, 2006. (see exhibit -2 of the letter)

·         Finance Bill, 2007-08 decided to treat zippers under textile industry and reduced excise duty on them accordingly, from 16% to 8%. (Notification No.  24/2007 C.E.)

·         Finance Act 2012-13 increased excise duty to 12%

About Zippers association of India
It is the umbrella organization of zipper manufacturers throughout the country. It seeks to build a platform where the manufacturers can share their concerns and be heard as a single body.

About Zippers

Zippers are an integral part of textile and apparel industry. They are used in the manufacture of readymade garment, woolen products, hosiery products, jackets, gloves, windcheaters and covers of pillows, mattresses, quilts and blankets etc. They are mostly made from textile materials like polyester or monofilament yarn, thread, tape etc.