Dr A. Sakthivel, Southern Regional
Chairman, Federation of Indian Export Organisations (FIEO), has, in a
communication to the Union Finance Minister, made a strong case for a 5 per
cent GST rate for job works in the garment sector. He made a detailed
elaboration of the reasons in his letter.
in his detailed letter to the finance minister last week released to the
press Dr Sakthivel said the industry takes this opportunity to compliment you
for GST rate of 5 per cent for certain services, as approved by the GST Council
in its meeting held on June 11.
The services by way of job work in relation to textile yarns [other than man-made
fibre (filament)] as textile fabrics have been brought to GST rate of 5 per
cent with full ITC as against 18 per cent announced earlier.
There are a number of activities which are undertaken by the job workers in
garment making which are left out. Some of the important services are as
follows: Cutting/Garmenting, Embroidery,
Finishing, Washing/Pressing, Packing, Fabric processing like bleaching, dyeing,
The job work in cotton, blend, MMF should be included under 5 per cent GST
uniformly for yarn, fabric, garments and made-ups, whether woven or knitted,
irrespective of fibre base.
The manufacturing model followed by the garment sector involves outsourcing
the job of various stages of production to job workers specialising in different
processes. Due to the strict norm fixed by our global buyers having rigid and
strict compliances standards, the job workers are required to perform such jobs
as per world standards.
In principle, the arrangement followed in the working pattern is illustrated
The job workers are engaged by the garment exporters for undertaking
certain specialised jobs in the nature of cutting, stitching, embroidery,
thread cutting, washing, pressing, buttoning, packing, tagging, etc. and not
for the supply of labour.
The main raw material in relation to which the jobs are to be undertaken is
supplied by garment exporters to the job workers.
The raw material issued to the job workers under the cover of internal
On completion of the assigned job, the job workers return the processed
goods under the cover of a delivery challans.
The job workers raise the invoice on
garment exporters on the basis of quantum of the work done.
It is submitted that the activities of job workers undertaken by them
constitute manufacturing activities.
Carrying out any intermediate production process on job work basis in
relation to textile processing is a common phenomenon.
Therefore, it is suggested that the activities, as above (i.e.
cutting/garmenting, embroidery finishing, washing/pressing, packing, fabric
processing like bleaching, dyeing, printing, knitting) be inserted in Serial
No.13A by way of job work in relation to the description of services in the
‘Schedule of GST Rates for Services’ as approved by the GST Council at 5 per
cent with full ITC, including garments and made-ups, which are left out,
whether woven or knitted, irrespective of fibre base.
The labour-intensive sector of apparel manufacturing heavily depends on job
work. Therefore, the recommendations of the Council be accepted.