Coimbatore MSMEs Urge GST Rate Reduction Amid Economic Strain: Calls for Government Intervention

By: Admin
September 13, 2024
Categories: BUSINESS News | 4 Min Read

Coimbatore’s Micro, Small, and Medium Enterprises (MSMEs) are rallying for a reduction in Goods and Services Tax (GST) rates on a range of products, following a meeting with Ministry of MSMEs officials on September 10, 2024. The gathering highlighted significant concerns over the recent GST hikes, especially on pumpsets, which have seen their rate climb to 18%. This increase has pushed many manufacturers towards the unorganized sector, now commanding a large share of the ₹25,000 crore pumpset industry.

The southern region’s industries are also grappling with high logistics costs due to the transportation of raw materials from northern states, compounding their financial pressures. Textile industry representatives voiced their frustrations over soaring raw material costs, noting that both cotton and manmade fibers are more expensive in India compared to global prices.

Further complicating the situation, the foundry and engineering sectors, particularly those engaged in exports, have expressed dissatisfaction. Since 2017, an 18% GST has been imposed on specialized tools used for customer-specific orders, which were previously exempt. This has added an extra layer of financial burden to these industries.

Micro units, which fall under the updated definition of MSMEs, are pushing for a GST reduction on job works to 12% or the introduction of a tax deduction at source for job works conducted for larger industries. Many micro units, particularly those with investments under ₹25 lakhs, are now excluded from most benefits and are calling for a distinct classification or dedicated board to address their specific needs.

The call for intervention reflects the broader struggles faced by MSMEs in Coimbatore, underscoring the urgent need for policy adjustments to alleviate the economic pressures on these critical sectors.