Revised Tax Under GST Reforms Threatens Coimbatore's Reputation As 'Manchester Of South India'

By S Srinivasan

Coimbatore: The Coimbatore District Small Scale Industries Association(CODISSIA), an umbrella body of over 20 associations in Tamil Nadu, has demanded reduction of the Goods and Services Tax(GST) to 5 percent to give relief to the distressed sector. The demand comes amid the Central government's recent GST reforms, which have seen reduction of the tax slabs from four to 2 but hiked the tax on job works from 12 to 18 percent.

GST And The Revised Slabs
The GST, implemented since July 1, 2017, was levied in 4 slabs of 28 percent, 18 percent, 12 percent, and 5 percent. The 56th meeting of the GST Council held in Delhi and chaired by Union Finance Minister Nirmala Sitharaman, reduced the existing slabs to two brackets of 5 percent and 18 percent. These changes will come into effect from 22 September, 2025.

While the GST reforms are being widely hailed, the tax changes have hiked the existing 12 percent GST on job works to 18 percent leaving the sector in distress.

CODISSIA President, Karthikeyan said that most of the firms associated with the sector and rely on job works are small and micro enterprises. He said the payment for the goods produced through job works is delayed by 60 to 120 days, he said.

“The current 12 percent GST is a big challenge for job order work. Therefore, the GST on job orders should be reduced to 5 percent. We have sent a petition to Union Finance Minister Nirmala Sitharaman in this regard."

Workers associated with the sector said that the revised GST on job works will put the sector, which is reeling under 20 working days a month, under more distress.

“Considering our family situation, GST should be reduced. The union and state governments should take immediate action to save lakhs of workers, otherwise Coimbatore will lose its pride as the 'Manchester' of South India," the workers said in anguish.

High Tax On Job Works
Coimbatore, the industrial capital of Tamil Nadu, is also known as the 'Manchester of South India'. The Micro, small and Medium-scale(MSMEs) industries have been put under severe pressure since the implementation of the Goods and Services Tax (GST) in 2017. Although the GST system was expected to consolidate and expand the industry, industry players said that it has become a major challenge for thousands of small entrepreneurs in Coimbatore and Tiruppur regions.

Workers at a spare part making factory in Coimbatore, Tamil Nadu (ETV Bharat)

GST Hike After Tax Reforms
Coimbatore is a major hub for small and micro enterprises (MSMEs). Job work industries – i.e. industries that manufacture engineering products, machine spare parts, motors, pump sets, etc. on a small scale – play a major role in this. In 2017, 12% GST was levied on such industries.

CODISSIA Coordinator James said that they have been continuously insisting on reducing GST to 5% for job works, which is 12 percent presently.

“But now it has been increased to 18 percent. In Coimbatore alone, 50,000 industries are engaged in job orders. More than 5 lakh workers are associated with the sector,” he said.

He said that there are lakhs of entrepreneurs in Tamil Nadu and other parts of India providing jobs to lakhs of workers. “While 12 percent tax alone is not manageable, 18 percent tax has become even more worrisome.'' he said.

'Announce Tax Cuts Immediately'
James said that they are engaged in turning raw materials provided by manufacturers for the production of spare parts, railway spare parts, motors and wet grinder spare parts as a mark of protest to press for their demand to reduce the GST to 5 percent.

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