New Delhi, Oct 25 (KNN) The 18 per cent GST on job works and 12 per cent GST on the sale and purchase of carpets has disrupted the business of carpet industry in four months since its implementation.

The industry is being adversely affected in the states like Uttar Pradesh, Haryana, Rajasthan, and Jammu and Kashmir, Carpet Export Promotion Council (CEPC) informed.

Talking to KNN, Mahavir Pratap Sharma, Chairman of the Carpet Export Promotion Council (CEPC) said that GST has negatively impacted carpet industry so far.

He said that carpet industry is a rural industry comprising of MSMEs (Micro, Small and Medium Enterprises) and most of the manufactures are uneducated and are unaware of the procedural formalities of GST.

He also said that there is a huge capital blockage as manufacturers are waiting for capital refunds from 4 months. Due to this capital crunch the prices have gone up to around 5-6 percent and MSMEs are facing resistance from the buyers.

When RCM (Reverse Charge Mechanism) will come into effect from 1 April 2018, the prices will spike further, he added.

Sharma noted that around 95 per cent of the carpets produced in India are exported and exporters are facing procedural and compliance issues and working capital loss

He further said that many rural MSMEs have shut down their operations and manufacturing processes. Mr. Pratap suggested that Government should simplify the whole GST filling procedure and should start issuing refunds to counter capital blockage problem which has slowed down the business.

CEPC is hopeful that the next GST council meeting on 10 November will bring some relief to rural MSMEs as GST rates are expected to come down. (KNN/AG)