6 months into GST, handicraft MSMEs still struggling in hard waters: FRHE

New Delhi, Dec 11 (KNN) With over six months into the Goods and Services Tax (GST) in the country, the handicraft sector comprising primarily of the Micro, Small and Medium Enterprises (MSMEs) in the country are yet to see experience ease as the sector continue to struggle, Federation of Rajasthan Handicraft Exporters (FRHE) informed.

Talking to KNN, Dileep Baid, President of Federation of Rajasthan handicraft Exporters explained the situation.

Initial 3 months

Baid said that the early three months of the GST dragged the handicraft sector into the hard waters with a lot of confusion over the GST rates on the items.

The sector was exempted from taxation in the pre-GST times, whereas under GST, different items are taxed under different tax slabs, as high as 28 per cent.

Explaining the concern further, Baid said that majority of the population that work in the handicraft sector are poor, less skilled workers and a high 28 per cent on their items impacted the chunk very badly.

GST rationale

There is no proper rationalisation of the GST rates so far, despite the alarm bell raised by the handicraft sector time and again. There is not a single item of the handicraft sector that falls under the low 5 per cent GST slab. The Minimum tax is the high 12 per cent for the items, Baid informed.

Baid said that despite repeated representations, there hasn’t been any significant step from the government’s end to look into the woes of the sector.

“Only recently we are getting to know that the government has formed a committee to look into the sector’s problems, the resolution is yet to come” he lamented.

Export related concerns

Echoing the concern of blocked working capital due to delayed refunds, Baid said that the handicrafts MSMEs too are facing similar issues. All the working capital that the sector had is blocked due to the delay in refund and the problem is slowly becoming the new normal.

Also the MEIS that existed on the handicrafts were sharply reduced. So much so that despite a revision, the incentive is still less as compared to the pre-GST times, further impacting the sector, Baid said.

Baid said that the handicraft sector unlike other sectors doesn’t possess much bandwidth to absorb such massive shocks and might end up going out of work if the government doesn’t take cognizance soon.