TNNLudhiana: With several segments of Ludhiana’s engineering industry grappling with the inverted duty structure, the Federation of Industrial & Commercial Organization (FICO) has demanded that the GST on steel be reduced from 18% to 5% to provide relief to micro, small and medium enterprises (MSMEs).FICO president Gurmeet Singh Kular said the bicycle, sewing machine and agricultural implements industries, including tractor parts manufacturers, were among the sectors most affected by the inverted duty structure. These industries procure raw materials taxed at 18% GST, while their finished products attract 5% GST. As a result, input tax credit (ITC) accumulates, locking up substantial working capital.Kular met National Traders Welfare Board chairman Sunil Singhi and submitted a memorandum seeking a reduction in GST on steel to 5%.He said that in several cases, pending GST refunds were higher than the bank credit limits available to industrialists. This had created a serious working capital shortage, increased dependence on bank finance and added to the financial burden on MSMEs, he added.Kular said steel was a key raw material for the engineering sector and urged the govt to reduce its GST rate to 5%, on similar lines to the reduced GST rate on thread, a key raw material for the textile industry. The move would lower production costs, ease the financial burden on manufacturers and improve the competitiveness of Indian industry, he said.FICO said GST rationalisation was urgently needed in the larger interest of MSMEs and the manufacturing sector.Manufacturers said high raw material costs and delays in the release of GST refunds had severely affected their operations. They claimed that around 13% of their working capital remained locked up with the government for months, putting additional pressure on manufacturing units.They said micro and small enterprises operated on thin margins, and delayed refunds were pushing several units to the brink of closure.Rakesh Aggarwal, a bicycle manufacturer, said manufacturers were struggling as their capital remained stuck with the government while they continued to meet expenses, including loan repayments. The situation had added to the difficulties faced by manufacturers dealing with the inverted GST structure and delayed refunds, he added.
