Advisor to the Governor of West Bengal Amit Mitra asked Indian Prime Minister Narendra Modi not to increase VAT or GST on textile products because he feared it could add to the burden on society. "Modi, call the Goods and Services Tax Council meeting now and reverse the decision before the sword of Damocles falls on the heads of millions," said Mitra on his social media account, Monday (12/27/2021). The Indian government plans to increase the VAT rate on man-made fiber textiles from the original 5% to 12% which will be effective on January 1, 2022. According to Mitra, this policy step is considered inappropriate.

Mitra also urged Indian Finance Minister Nirmala Sitharaman to hold a meeting with the Goods and Services Tax (GST) Council. The meeting was held to cancel the 7% tax increase on textile products.

He assessed that the increase in goods and services tax rates on man-made fiber textile products could cause 15 million people to lose their jobs. In addition, he also predicts as many as 100,000 textile companies will close if the VAT rate increase is realized.

According to him, the demand for natural fiber in the textile trade is vulnerable to all kinds of cost increases. The burden faced by the textile industry is also increasing following the price of cotton products which is experiencing 70 percent inflation.

In addition, he is also worried that textile companies will be pushed back into the informal sector. Turning the textile industry into the informal sector will cause the government to find it even more difficult to explore tax revenues