Businessmen of Ahmedabad said that the traditional textile business in the city was mainly done in cash and was based on trust and informal dealings. According to them, the government’s initiative to formalize the trade though is advisable prima facie have derailed the textile trade. There has been a remarkable decrease in demand from the end users. Processors complain that the rise in prices of raw materials have decreased their profit margins. Now Diwali season is their next hope to revive the business.
Right from the introduction of GST there were issues. Organizations like Maskati Market Kapad Mahajan had to put-up special camps to get the traders registered under GST. Now the businessmen from both trading and processing sector are complaining of sales decline by about 35-50%. The good thing is they are not blaming only GST for this mess.
"It was a well known fact that this business was predominantly unorganized and informal. The sudden shift to formal economy meant that there was shortage of money that can be used for transactions. Demonetization had already slowed down the economy. Later on GST slowed it further," informed Gaurang Bhagat, president of Maskati Market Kapad Mahajan.
Bhagat said that the absence of demand is due to drop in purchasing power of the people. "Rise in prices of essential items and slowing incomes has altered expenditure pattern of masses. People are now giving priority to basic needs like food and fuel and curbing discretionary expenditure. The resultant impact is that businesses in all sectors have been hit and textile is not an exception," said Bhagat.