GST on beedi: High tax rate could help Naxalites

GST would make compliance easier for big businesses, but hurt small scale industries., says SJM

The Swadeshi Jagran Manch, a Sangh Parivar affiliated think tank on economic issues, on Wednesday said the Centre needed to protect small-scale industries (SSIs) from becoming non-competitive after the rollout of the Goods and Services Tax (GST).

It said SSIs were not only the largest provider of jobs but have also protected industry in India from the onslaught of Chinese products. In the recent past, the SJM has frequently given calls for boycott of Chinese made products.

The SJM expressed its solidarity with the “genuine demands” of small scale industries and traders organisations who are opposed to GST rollout.

SJM convenor Ashwani Mahajan said the government should favourably work upon to address concerns of SSIs and traders for a balanced GST, and help with their smoother transition to a new tax regime.

Small traders, businesses and SSIs constitute a significant support base of the Sangh Parivar and Bharatiya Janata Party.

The SJM and Rashtriya Swayamsevak Sangh affiliated Laghu Udyog Bharti have been flagging the concerns of SSIs on GST rollout. There have been shutdowns in several parts of the country by traders, small businesses and SSIs across the country in the last few days.

Mahajan said GST would make compliance easier for big businesses, but hurt small scale industries.

The Manch said taking away of the excise exemption of Rs 1.5 crore would further put small-scale industries (SSIs) at a disadvantage.

“While deciding on tax rates care has not been taken to keep these low for commodities being produced by SSIs, which provide millions of jobs,” Mahajan said.

The SJM said biscuits, pickles, confectionery, scissors and host of other products produced by SSIs and cottage industries are set to attract higher rates of GST, which is likely to affect their competitiveness.

A huge concern for SJM is the impact on the beedi industry, which provides direct and indirect employment to nearly 50 million people, mostly in Naxalite-affected areas of the country. Mahajan said beedi, under GST, would be taxed at 28 per cent and make noncompetitive against small cigarettes.

“This would endanger jobs of millions of tendu leaf collectors and beedi rolling workers, especially women,” he said.

Sangh Parivar and SJM activists working in Left Wing Extremism affected districts are concerned that the consequent loss of jobs in the absence of government providing alternative livelihoods might help Naxalites consolidate.

The SJM said SSIs are of core importance to the country in terms of output, employment and exports. “We also need to keep in mind that our SSIs, despite various disadvantages, have given tough competition to the Chinese onslaught.

If new tax regime works against their interests, influx of Chinese products will increase, causing huge balance of payment deficit,” Mahajan said.

Photograph: Parivartan Sharma/Reuters