Ahmedabad: Gujarat’s textile traders claim that the Goods and Services Tax (GST), the Narendra Modi government’s flagship tax reform, took a heavy toll on their businesses, but they are still largely batting for their former chief minister in this Lok Sabha election.
A similar mood prevails in the state’s famed diamond industry, where the sheen of the Modi brand stands restored since the initial shock of the GST gave way to better business, say traders.
“GST has definitely impacted our business. Smaller traders have been hit the most,” said Manoj Agrawal, president of the Federation of Surat Textile Traders Association (FOSSTA).
“Business is picking up from what it was before, but it’s still down by 40 per cent. The fact that we have to give advance tax and do a lot of paperwork has added to the overall cost,” he added. “Earlier, there was no tax on textiles but now there is. So, it has certainly impacted us.”
Agrawal, however, said at once that this would not translate into the defeat of the Bharatiya Janata Party (BJP). “Modi is good for the nation,” he added.
The twin shocks
Introduced in July 2017, GST subsumed 17 indirect taxes, like excise and service tax, and sought to simplify taxation while making it more transparent.
However, it was rolled out in the middle of a financial year, and teething problems left a lot of traders, especially smaller players, high and dry. That it came just months after the Narendra Modi government’s shock demonetisation move, announced on 8 November 2016, triggered a cash crisis and deepened the sense of gloom.
The trading community has always been the backbone of the BJP. But a section shifted away from the party ahead of the 2017 assembly elections — on the back of the twin shocks of demonetisation and GST — reducing the BJP to 99, its lowest-ever tally in the 182-member House, even though it won. It had won 115 seats in the previous assembly election.
Talking to ThePrint, a BJP leader said the traders’ anger had subsided now and the saffron party was sure of doing well in the Lok Sabha elections.
The Congress, which has been trying to tap the anger over the implementation of the two decisions, won 77 seats.
It’s a performance the Congress, which won none of Gujarat’s 26 seats in the 2014 Lok Sabha election amid a clean sweep by the BJP, is hoping to replicate this election.
“There are many who are not voicing their concerns openly as they are scared,” a senior Congress functionary told ThePrint. “But they will definitely answer the BJP with their vote.”
‘Good for the nation’
When asked whether GST rollout would impact the BJP’s electoral fortunes among the lakhs of Gujarati textile traders, Agrawal of FOSSTA voiced an emphatic “no”.
“Modi desh ke liye achha hai. Demonetisation ya GST long-term mein achhe hain aur desh ke liye achhe hai (Modi is good for the nation. Demonetisation, GST are good for the long-term),” he added. “We support Modi completely.”
Textile trader Dhiren Dalal is less unequivocal, saying the “hurried” way the government had implemented GST will impact the BJP, even if just by a whisker.
“Returns take a lot of time… Earlier, there was no tax as it used to be a family business but now we are being taxed,” he told ThePrint. “The government has done it in a hurry and it will surely impact the elections but not significantly.”
The president of the South Gujarat Textile Processing Association, Jitu Bhai Vakharia, defended Modi, blaming the state government for the improper implementation of GST, and attributing the market trouble to teething issues.
“Right from Vajpayee to Manmohan Singh, everyone wanted to bring in GST but couldn’t. So, how can you blame Modi for it?” he asked.
“As far as textile processing is concerned, we were able to have a dialogue with the government and reduce the duty from 18 per cent to 5 per cent,” he said.
Modi, he added, would win the Lok Sabha elections once again.
‘Support Modi completely’
Gujarat’s famous diamond industry, a powerful bloc that employs over 20 lakh people, exports gemstones worth Rs 2.5 lakh crore every year.
Babubhai Gujarati, president of the Surat Diamond Association, said GST had begun to work in traders’ favour over the past few months.
“The government took a difficult decision but it is paying off now,” he added. “With GST, we get a pakka (bona fide) bill with address, so it’s good for us in trading. We support Modi in this completely.”
A section of the traders talked about the business lost since India withdrew Pakistan’s most-favoured nation [MFN] status in the wake of the 14 February Pulwama attack, but claimed that Modi remained the most viable candidate.
“After Pulwama (terror attack) and Balakot (air strikes on Jaish-e-Mohammed camps), traders have not been sending goods [raw] to Pakistan since India withdrew the MFN status,” said Dev Kisan Mangani, chairman, textile committee, South Gujarat Chamber of Commerce and Industry (SGCCI).
“Though trade has been impacted, Pakistan has suffered more as they used to get raw material from us,” he added.
When asked whether the impact on trade will have any bearing on the elections, Mangani said traders will continue to support the Modi government in the absence of a “healthy alternative” .
“He is talking about important issues like nationalism, which is much more important that the temporary loss we may have suffered,” he added. “In the assembly elections, they suffered a slight setback. but things will be smoother now.”