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Web Exclusive | December 2017

RCM under GST worries cotton industry

The issue of Reverse Charge Mechanism (RCM) under GST is worrying the cotton industry, especially the ginners in India. Hence, the Cotton Association of India (CAI) convened a joint meeting of the Presidents and Secretaries of upcountry associations of all cotton growing States in Mumbai recently to deliberate on the issue of Reverse Charge Mechanism (RCM) under GST and to chalk out strategy of finding out a solution to this vexatious problem in close coordination with each other. CAI has about 70 ginners enrolled as its members and therefore, this meeting was convened to understand the problem of RCM also from the ginners’ perspective.

The meeting was chaired by Atul S Ganatra, President, CAI and the persons present at the meeting included B Ravinder Reddy, President and Kakkirala Ramesh, Secretary, Telangana Cotton Millers & Traders Welfare Association, Manjeet Singh Chawla, President and Raju Jain, Secretary, Madhyanchal Cotton Ginners & Traders Association, B S Rajpal, President, Maharashtra Cotton Ginners’ Association, Anil Somani, Khandesh Gin Press Kharkhandar & Traders Development Association, Omprakash Jain, President and Shantilal M Ostawal, Secretary, Karnataka Cotton Association and Vinod Jain, Joint Secretary, Madhya Pradesh Cotton Merchants’ Association.

The plight of the entire cotton sector across the country and the issue of pending refunds to exporters since July 2017 on account of GST were deliberated at the meeting. Ravinder Reddy, President, Telangana Cotton Millers & Traders Welfare Association highlighted the damage caused to the crop and heavy losses suffered by the farmers due to pink bollworm and uncertain rains in Telangana. Reddy added that this matter was engaging the active attention of the State Government.

Manjeet Singh Chawla, President of Madhyanchal Cotton Ginners & Traders Association pointed out that due to RCM, huge funds of ginners were blocked and since cotton seed buyers and the buyers of cotton bales were not paying GST to the ginners this has led to the blockage of huge funds of the ginners. Chawla requested CAI to take up the matter relating to removal of RCM on kapas. He also stated that the RCM on cotton has also led to tarnishing relationship between the spinners and ginners.

Omprakash Jain, President of Karnataka Cotton Association stated that unless RCM on cotton is removed immediately there will be no way left to the ginners but to close down their operations. BS Rajpal, President of Maharashtra Cotton Ginners’ Association stated that RCM has been imposed only on cotton and not on other agri-commodities which is totally unjust. He added that if this RCM continues on kapas it will entail huge losses to the sector. He also requested CAI to take up the matter relating to removal of RCM with the Government which will also indirectly benefit the farmers in realising better price for their kapas.

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