Budget: Gujarat industry seeks cold storage parks, PLI scheme for diamond

On the eve of the Union Budget 2023-24 being tabled in Parliament on February 1, traders from various sectors in Gujarat have put forth their demands to the finance minister Nirmala Sitharaman.

To begin with, the Gujarat Chamber of Commerce and Industry (GCCI) has demanded that the finance minister should reduce the non-corporate tax and the tax burden on industries in the upcoming budget.

“Tax rates or minimum alternative tax (MAT) was reduced post implementation of Taxation Laws Amendment Act 2019. However, the tax rates for non-corporates continue to be exceedingly high. Capital gains other than those under section 111A, 112A or 115D are also subject to high surcharge. Therefore, the tax including surcharge and cess for all non-corporates such as LLPs and AOPs should be brought down to 25 per cent,” wrote Jainik Vakil, a CA and the GCCI president, in a memorandum to the FM.

The industries of South Gujarat, represented by the South Chamber of Commerce and Industry (SGCCI), have requested the FM to set up minimum three parks in the region, which can provide cold storage facilities to strengthen its agri and food processing sector.

Diamond industry in doldrums

Meanwhile, the diamond industry of Surat has sought a new PLI scheme for manufacturing gems and jewellery and has sought to abolish the 7.5 per cent import duty on raw materials for lab grown diamonds. The Gem and Jewellery Export Promotion Council based in Surat, want the government to give the nod for the sale of rough diamonds through a special notified zone. In this way they can facilitate trade between SMEs and diamond mining companies, thereby allowing the diamond exporters to benefit from the policies of major mining countries in Africa.

Also read: Vibrant Gujarat: High on promises, little on ground since 2003

Noticeably, over 90 per cent of the world’s diamonds are cut and polished in Surat, Gujarat. However, the industry has been hit by recession since the pandemic, and then followed by the Ukraine-Russia war, has wiped out nearly 35 per cent of global demand. The industry has witnessed major layoffs in the past few years and a high suicide rate amongst its workers.

According to the Surat Diamond Workers Union since Diwali 2022, at least 20,000 workers have lost their jobs across the diamond industry.

“I believe after Diwali till now, more than 20,000 workers lost their jobs. In Kataargam, the diamond hub of Surat, multiple small and medium polishing and cutting units have shut down forcing workers to lose jobs. The larger companies have been laying off and adjusting by increasing work hours of restricted workers making unemployment a huge issue in the industry,” stated Bhavesh Tank, the vice-president of the Diamond Workers Union of Gujarat.

Textile industry’s 17-point demands

The textile industry in Surat represented by the Federation of Textile Traders Association (FOSTTA) have written memorandums to the finance ministry with seventeen point demands.

Champalal Bothra, president of FOSTTA told The Federal that they require a complete fresh review of the GST tax system, reduction in tax rate slabs of income tax, a thorough review of all laws and regulations applicable to retail trade. Besides their long list of demands include implementation of the one nation-one license policy on the lines of one nation-one tax, effective Pension Scheme for traders, insurance scheme for traders on the lines of the scheme already enforced in UP, and separate credit rating norms for small businesses, easy credit to traders by banks and other financial institutions.

Further, he said that the NBFCs and MFIs should be strengthened for advancing loans to small businesses, fast track court for payment, other disputes among traders and check- bounce cases under section 138 of the Income Tax Act, should be established.

Bothra also said, “We want special trade zone to be set up near villages on the lines of special economic zones, trade fairs and exhibitions of Indian products in the country and around the world should be organised to promote both internal and external trade. A declaration of various incentives for adoption and acceptance of digital payments among the business community, immediate enforcement of e-commerce rules under consumer protection act, immediate announcement of e-commerce policy, formation of a regulatory authority for e-commerce, announcement of a National Trade Policy for retail traders and separate ministry for internal trade, both at the centre and in the states.”

Also read: Unemployment a key concern in Gujarat even as Modi, BJP remain popular

Textile industry at loggerheads with BJP government

Noticeably, the textile traders of Surat have been at loggerheads with the BJP government both at the state and in the Centre since the implementation of GST in the year 2017.

In 2017, the textile industry witnessed an unprecedented protests by lakhs of textile traders. Years later, the industry is yet to recover from the loss it incurred in 2017. Four crore metres of fabric used to be produced daily in Surat, until the traders were slapped with the new tax regime followed by demonetisation and the pandemic.

The textile market now produces only one and a half crore metres since the GST has hit the textile market. 70,000 power looms were sold in scrap as traders went bankrupt or changed their line of business. About four lakh workers, who were in the embroidery business, half of whom who are women, were rendered jobless within a week of GST implementation in 2017.

Distressed MSME sector seeks help

The MSME sector of Gujarat has stated in their letter to the FM that the biggest support needed from the government is on the finance and banking front. Seeking help for the distressed MSMEs, Prashant Patel, the president of the Federation of India Micro, Small and Medium Enterprises (FISME), said, “The MSME sector needs more effective intervention by the Reserve Bank of India (RBI) to improve quality of banking services and enhance credit flow to MSMEs. We have requested the government for a uniform policy and creation of a separate desk in the RBI to resolve complaints regarding the foreclosure charges being levied by private sector banks.”

The Morbi ceramic industry represented by the GCCI has demanded a clear mandate for nationalised and private banks to accept inward remittances arising out of exports to Russia. The district houses about 1,000 ceramic units that caters to 18 per cent of global demand and earns ₹15,000 crore from exports. About 150 ceramic manufacturers of Morbi export tiles to Russia.