GST, demo major poll issues in Coimbatore and Tiruppur

Medium and Small-Scale Industries (MSMEs) have always been the backbone of the economy in both Coimbatore and Tiruppur, the Manchester of South and knitwear hub of India, but economic policies like demonetisation and the introduction of Goods and Services Tax (GST) broke the spine.

Almost two years of demonetisation and after several measures, MSMEs are still struggling to be on their feet leaving hundreds of owners in a disarray and employees dependent on them in a lurch. Many of these MSMEs did not oppose levy of GST but wanted the new structure to be implemented after having explained the benefits to the end-users – the "hasty and chaotic implementation" led to several owners closing their MSMEs and even joining restaurants as supervisors.

As the twin economic policies cast a shadow this election season, BJP, which is the ruling party at the Centre, has promised to "simplify" the tax with none other than Prime Minister Narendra Modi himself handing out an assurance that the concerns of MSMEs would be looked into and their interests will be taken care of.

However, the DMK-led alliance is going to the town asking small-time businessmen to vote the BJP out for the "surgical strikes" it carried out on the MSMEs through implementing demonetisation and GST. To cash in on the sentiments against the BJP, the DMK alliance has allotted both Coimbatore and Tiruppur to CPI(M) and CPI respectively.

If manufacturers of pump sets and wet grinders were affected in Coimbatore, small-time knitwear units were the worst hit in Tiruppur.

'Won't trust assurances'

K S Babuji, general secretary of the South India Collar Shirts and Innerwear Small Scale Manufacturers Association (SISMA), said MSMEs and labourers are not ready to believe the "oral assurances" of the government.

"Our demands were not heard for two years but as elections approach, the Centre says GST will be simplified. We are ready to even vote for the BJP if it comes with a clear explanation on how it intends to simplify the tax," Babuji told DH, adding that the issue will resonate in polls.

Kovai Power Driven Pumps and Spares Manufacturers Association (KOPMA), which has 500 members, has announced its support for the CPI(M) candidate P R Natarajan and is actively campaigning for him.

A few industrialists say though the Centre took some corrective measures, it was too late since much damage was done by then. Tiruppur Exporters’ Association (TEA) President Raja M Shanmugham said though all procedural lacunas in GST have been corrected and the system should be made more user-friendly. "If a wrong entry is made, it takes a longer time to get it rectified and this needs to be corrected," he told DH.

K Maniraj, President of Kovai Power Driven Pumps and Spares Manufacturers Association (KOPMA), told DH that before the introduction of GST, his factory had employed 30 people. "Now I have just 10 people with me as I am not able to find funds to manufacture the number of pumps that I used to before the introduction of the tax. Also, the differential tax slab applied on raw materials procured and the cost of the final product has wrecked MSMEs" he said.

Another industrialist who did not want to be named said even big companies faced the brunt initially because the system was chaotic. "And to add to our miseries, the Input Tax Credit (ITC) also got delayed by about eight months initially, but things are getting better now. Things are being streamlined but the MSMEs are yet to recover," he said.

Coimbatore's problems

Vanitha Mohan, former President of Coimbatore chapter of Indian Chamber of Commerce and Chairman of Pricol Limited, said GST had "broken the back" of MSMEs and blamed the governments for not coming to their rescue. "They were put to lot of hardships and these MSMEs needed a lot of support but not enough was provided. These MSMEs should be given a new lease of life immediately and that should be the focus. One should understand that MSMEs are the backbone of Coimbatore’s economy," Vanitha told DH.

Coimbatore alone has 3,000 water pump manufacturers and around 15,000 units that produce spare parts for the pump sets. At least 300 such manufacturing units have shut down resulting in thousands of job losses.

The worst-hit in Coimbatore are the job work units, who have been brought under the tax ambit for the first time since independence in 1947. The job units largely comprise of five to ten people who work in the confines of their residence and were an integral part of industries that manufacture pump sets, wet grinders, automobile and textile spares.

Babuji said the governments had never listened to their demand. The differential tax slab on the raw materials and the product had forced many job work units and micro enterprises to shut their shops. "Units which are run by just 10 people no more exist in Tiruppur. In addition, 30 per cent of small units have been destroyed," he claimed.